Bangkok--17 Dec--Hill & Knowlton
DHL announces results of third study Fuelling Global Trade: How GDP growth and oil prices affect international trade flows
DHL, the world’s leading express and logistics company, revealed today the findings of a study commissioned to the Economist Intelligence Unit on economic trends in world trade. The report, entitled Fuelling Global Trade: How GDP growth and oil prices affect international trade flows, looked at trade flows between 39 countries in three regions: Asia, the European Union and the North America Free Trade Agreement (NAFTA). It covers two key areas — the impact of economic slowdown on trade flows in Asia and the West; and the effect of oil prices on the value of trade between these countries.
The study includes three countries which are part of NAFTA (US, Canada and Mexico), 25 European Union countries, six largest economies in ASEAN[1] along with Japan, South Korea, India, China and Hong Kong in Asia. The report examines the bilateral trade flows between each country and those outside its immediate trade bloc or region, which resulted in 383 bilateral trade relationships.
“As a trade facilitator, it is pertinent that we regularly encourage research on macroeconomic trends so as help our customers and ourselves to position our businesses to maximize future trends. The study reveals the slowing Asian growth story and the need to rebalance their economies. The challenge that Asian trade faces today is to hasten the migration to high value goods and focus on managing their growing dependence on oil,” said Frank Appel, CEO Deutsche Post World Net, parent company of DHL.”The impact of rising oil prices will add risks and negatively impact Asian international trade. The study also reveals that for 2009 and beyond, international trade will depend more on rising Asian incomes, than the West.”
Key findings of the study, based on a five-year forecast include:
Link between income and trade is stronger between Asia and the West than between North America and Europe
According to the Economist Intelligence Unit study, the link between income and trade is stronger between Asia and the West than between North America and Europe. A 1% increase in combined income between an Asian country and a Western country will deliver 1.36% increase in trade.
Trade between ASEAN and the West will rise 1.35% for every 1% increase in combined income, compared to trading relationship between two Western countries - a 1% increase in combined income delivers a 1.14% increase in trade.
Oil prices and trade - Greatest effect on Southeast Asia
Another key finding shows that based on an average of all the 383 bilateral trade relationships in the study, a 1% increase in oil price leads to a 0.24% reduction in trade, with the assumption that all other drivers, such as income levels in two countries, remain constant.
Meanwhile, high oil prices have the greatest effect on Southeast Asia, where trade decreases the most. The impact on oil prices is much greater when an ASEAN country trades with a nation in the EU or NAFTA - a 1% increase in the price of oil reduces the value of trade by 0.3%. Assuming no rise in income levels, the value of trade between ASEAN and the West would fall by 30% over five years if oil prices doubled, as in 2008.
Asia has a higher proportion of trade centered on low-valued goods
The study explains that the larger impact of high oil prices on Asia, ASEAN in particular, is due to the types of goods being traded. In West to West trade there is a higher proportion of ‘high-value’ goods such as computers, aircraft and media devices, and a smaller share of ‘low-value’ goods such as coal and gas, coconuts, palm oils and textiles and shoes. In contrast, Asia nations are likely to have a much higher proportion of trade centered on low-value goods.
Since transport costs make up a larger share of the final cost of low-value goods than they do for high-value goods, rising oil prices have a larger impact on trade growth for Asia.
"Much of Asia has grown up on the back of vibrant trade with the West. But with the economies of North America and Europe forecast to perform poorly in 2009, the impact on Asia's trade-dependent economies could be serious indeed. This study highlights the impact of slowing global growth on Asia's trade, and illustrates clearly the need for governments in the region to re-balance their economies," says Justin Wood, a director at the Economist Intelligence Unit and South-east Asia expert. "Equally, with oil prices showing extreme volatility this year, and with the price of oil likely to rise after the current economic downturn passes, this study identifies further challenges for Asian nations to address, especially in terms of pushing their manufacturing industries up the value chain."
DHL has been actively involved in B2B and B2G dialogue in reducing the complexity, risks and cost of international trade within and across the Asia Pacific region through participation at high level conferences such as APEC Summit and ASEAN Business Summit, and sponsorship of market studies that look at both trade and logistics trends, issues and challenges.
This is the third time it has commissioned the Economist Intelligence Unit to conduct a market study on trade flows, and the scope continues to include regions outside of Asia Pacific to gain deeper insights into international trade issues. In 2007, DHL presented the Economist Intelligence Unit’s analysis of the changing patterns of trade between Asia and the rest of the world in Trading up: A new export landscape for ASEAN and Asia. The year before, it launched ASEAN exports: today, tomorrow and the high-value challenge, which looked at the countries successful in switching to high-value exports.
About DHL DHL is the global market leader of the international express and logistics industry, specializing in providing innovative and customized solutions from a single source.
DHL offers expertise in express, air and ocean freight, overland transport, contract logistic solutions as well as international mail services, combined with worldwide coverage and an in-depth understanding of local markets. DHL's international network links more than 220 countries and territories worldwide. Some 300,000 employees are dedicated to providing fast and reliable services that exceed customers' expectations.
DHL is a Deutsche Post World Net brand. The group generated revenues of more than 63 bn euros in 2007.
For the latest news and happenings about DHL in Asia Pacific, please visit: http://press.ap.dhl.com
About DHL Thailand
DHL Thailand offers customers a comprehensive range of logistics solutions through three business units: DHL Express, DHL Global Forwarding and DHL Exel Supply Chain. Customers can enjoy the convenience of one-stop-shop service, from shipping documents to containers, delivered by over 6,300 DHL staff. With over 70 locations around Thailand, DHL’s services cover 76 provinces in thecountry. For further information, please visit our website at http://www.dhl.co.th
[1] Association of Southeast Asian Nations
DHL Thailand Press contacts:
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Hill & Knowlton Thailand
Ms. Orawan Chuenwiratsakul
Ms. Visa Cheawsamut
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Email:[email protected]
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