The US, which has buoyant trade relations with Bric countries, has taken a big hit with the recession pulling down its global trade. The fall in demand from US markets, the world?s single largest importer of goods & services, has impacted countries across the globe, and especially, the emerging markets economies. This is especially so in the case of Bric countries which have traditionally had a large surplus with the US.
Of the $2 trillion worth of imports made by the US in 2007, China was the largest beneficiary with its share of total US imports a hefty 16.8%, which translated into exports worth $340 billion. Other Bric countries had a substantially smaller share, with Brazil accounting for $27.2 billion (1.3%), India for $25.2 billion (1.2%) and Russia for $20.2 billion (1%).
To gauge the extent of the shrinkage in the US markets, one needs to look at the dwindling size of the monthly imports into the country. Trends show that the US merchandise imports, which rose from $160 billion in December 2007 to a peak level of $200 billion in July 2008, has shrunk to just about $120 billion by January 2009. China, the largest supplier, has seen its imports shrink from a peak level of $34 billion in October 2008 to just above $24 billion by January 2009. The fall was even larger for Canada whose supplies to the US declined by around $13 billion from the peak levels to touch $17 billion in the most recent month.
Quarterly figures on total US imports in 2008 show the trends were mixed. US imports, which steadily picked up in the first three quarters of the year suddenly shrunk from the fourth quarter. Growth of merchandise imports initially accelerated from 11% in the first quarter of 2008 to 14.2% in the third and then shrunk by 7.8% in the fourth. And most recent figures for January 2009 show that the negative trends in US merchandise imports have even accelerated since then and declined by 24.8%.
Countries worst hit by shrinking US imports included Canada, Germany, Mexico and Japan?the largest supplying nations to the US after China. Figures for January 2009 show that the highest decline was in Canada (34.5%), followed by Japan (30.7%), Mexico (27.5%) and Germany (26.5%). Other developed countries like UK saw its supplies decline by a quarter.
Most Asian nations, however, evaded the worst impact of the US slowdown. January 2009 figures show that Asian economies, which have seen their supplies plunge include Hong Kong (42.9%), Malaysia (34.4%), Singapore (31.2%), Japan (30.7%), Philippines (28.3%) and Taiwan (23.3%).
The impact of sharp fluctuations in the US markets has also impacted imports from Bric countries. In fact, the gains made by the Bric countries in the first three quarters of 2008 were much more substantial with growth picking up from 5.3% in the first quarter to 14.2% in the third. And the impact of the decline in imports in the fourth quarter was also milder with the Bric exports still marginally rising by 0.4% as compared to the 7.8% shrinkage in the overall US imports. And figures for January 2009 show that Bric imports into the US declined by just 8.5%, which was just a third of the overall shrinkage in the global US imports during the month.
Among the Bric countries, the most resilient supplying nations were Brazil and Russia who withstood the initial shocks, as is evident from the continued pick up of their US supplies in the fourth quarter. Figures show that fourth quarter supplies from Brazil grew at 15.8% and those from Russia at 5% even as the US global imports shrunk by 7.8% during the period. However, recent numbers cast a shadow on this achievement as the imports have faltered much more sharply than those of other Bric nations.
China, on the other hand, had a smoother changeover. Supplies from there largely followed global trends and picked up sharply over the first three quarters of 2008 and then shrunk by 0.7% in the last quarter, which was just a fraction of the overall decline in US imports from the global market. And the 5.1% decline in US imports from China in January 2008 was also the least from across the Bric nations.
India, however, seems to have fared the worst as the 3.3% decline in supplies to the US in the fourth quarter was the highest among Bric countries. And the 21.6% decline in January 2009 was more than double the Bric average.
?p.raghavan@expressindia.com