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Home » Global Trade and Container Flow Index: Economic uncertainties remain amid weak global demand
Forward Thinking

Global Trade and Container Flow Index: Economic uncertainties remain amid weak global demand

June 24, 2016
Cathy Chinich and Shanton Wilcox
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Global economic growth is starting to stabilize after a rocky start to the year. Oil prices have begun to rebound after hitting a 20-year low, and volatile financial markets are settling down. However, uncertainty remains high amid weak global demand.

Among the mature economies, the United States expanded by 0.5 percent in Q1/2016 and is expected to continue gaining momentum in the second half of the year, buoyed by a recent rise in industrial output, housing starts, and retail sales. However, the Federal Reserve is maintaining a cautious stance, as adverse foreign developments and election-year unknowns continue to weigh on markets. Meanwhile, the eurozone also experienced growth in Q1/2016, driven by a divided recovery with stark differences in economic performance among the EU member countries. Additionally, the region's economy could be vulnerable to disruption if Europe has difficulties integrating migrants from the refugee crisis into the workforce.

Article Figures
[Figure 1] Container throughput vs. total trade
[Figure 1] Container throughput vs. total trade Enlarge this image
[Figure 2] Capgemini Consulting Global Trade Flow Index
[Figure 2] Capgemini Consulting Global Trade Flow Index Enlarge this image

Among emerging economies, strong capital outflows in China and faltering exports drove the country's currency to a five-year low. To rebalance the economy, China focused more on consumer demand and less on exports and infrastructure investments. In Japan, exports were aided by a weak yen, but the threat of deflation loomed, and in Japan's manufacturing sector expectations were downgraded due to global uncertainty and faltering demand. Lastly, in South Africa, the economy contracted in nearly all sectors and failed to gain momentum in Q1/2016.

Global container throughput is expected to grow by 0.90 percent in the first quarter, up from -1.59 in Q4/2015 (see Figure 1). Total trade is expected to fall -3.52 percent in Q1 after deteriorating by -3.37 in Q4. Following recent trends, both container throughput and total trade are not expected to widely change as the global economy weathers the slowdown in China.

Cathy Chinich is a managing consultant at Capgemini Consulting.
Shanton J. Wilcox is partner and head of the North America manufacturing/high tech segment of InfoSys Consulting.

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