Global Trading Environment 6r3e4n

Global Trading Environment And Recent Trade

Made By: Tushar Chawla MB12D16

Major Economies of the World With their GDP (PPP).

    

United States China India Japan Russia -

$15.6 trillion $12.4 trillion $4.8 trillion $4.5 trillion $3.4 trillion

WHAT IS GLOBAL TRADING ENVIRONMENT??? Refers to Exchange of capital, goods, and services across international borders. Represents a share of GDP. Guiding Principle of global trade is comparative

advantage.

UNITED STATES OF AMERICA • World's

largest

national

economy

since

the

1920s. •

Second-largest trading nation in the world behind China.

• World‘s third largest exporter, after the European Union and China . • 60% of funds used in international trade are U.S. dollars.

Trading Partners of US. Canada China

15.30%

Mexico 41.90%

Japan 14.60% South Korea 13.30%

United Kingdom 4.20%

2.60% 2.80%

5.30% Others ( Brazil , Taiwan , India, Netherlands,Italy,

Exports of USA (2012): $1.564 trillion Capital Goods 6.10%

3.80%

7.60%

Industrial Supplies

27.90%

Consumer Goods

8.60%

Automotive vehicles and components

9.40%

Food and beverages

11.80%

24.80%

Fuel , oil and petroleum products Aircraft and components Others

Imports of USA (2012):$2.299 trillion 4.80%

Consumer Goods

3.10%

Capital Goods 5.40%

22.70%

13.10%

Industrial Supplies Crude Oil

18.70%

13.70%

Automative vehicles and components Computers and Accessories Food and beverages

18.40% Others

China • World's

second largest economy by nominal

GDP and by purchasing power parity . • China is also the largest exporter . • Second largest importer of goods in the world • The world's fastest-growing major economy,

with growth rates averaging 10% over the past 30 years.

•Exports – $ 1906.08 million •Imports - $ 1620.90 million •Balance of Trade - $ 285.18 million.

•From 2004 to 2009 China’s annual trade surplus has increased 10 times. •Export includes apparel , textiles , iron ore , steel , optical and medical equipments. •Major Export partners are – United States – 17.2 % Hong Kong – 15.8% Japan – 7.4% South Korea- 4.3%

INDIA • Third-largest by purchasing power parity (PPP). • One of the G-20 major economies and a member of BRICS. • India is the 19th-largest exporter and the 10thlargest importer in the world. • India's Gross Domestic Product grew at 4.4 percent in the second quarter of 2013- worst quarterly rate since 2002.

•India’s imports – Rs 2342.13 billion •India’s exports – Rs 1652.02 billion •Trade deficit -

•Export

includes

Rs 690.11 billion

software

,

petrochemicals,

pharmaceuticals , textiles , precious stones , machinery , iron ore.

•Import includes crude oil , coal , fertilizer , gold , chemicals.

Export Partners Column1

U.S.A U.A.E

China Singapore Hong Kong Japan

Japan • Fourth largest by Purchasing Power Parity

[10]

.

•The world's second largest developed economy.

•World's

3rd

largest

automobile

manufacturing

country. •Exports

include

motor

vehicles,

iron

and

steel

products , auto parts , plastic materials. •Import Includes petroleum , liquid natural gas, coal, semiconductors . • Export to – China ( 18%) United States ( 17.7%) South Korea ( 7.7%) Thailand ( 5.5%) Hong Kong (5.1%)

• Imports from – China (21.3%) United States (8.8%) Australia ( 6.4%) Saudi Arabia (6.2%) United Arab Emirates (5%) • Exports – JPY 5783.71 billion • Imports - JPY 6744.04 billion • Trade deficit – 960.33 billion

RUSSIA • Fifth largest by purchasing power parity.

• Russia's oil and gas production and pipeline projects have been a primary source of Russia's economic growth. •Abundance of natural resources, including timber, precious

metals, and particularly fossil fuels (oil, natural gas, and coal)

.

•Exports petroleum and petroleum products, natural gas, metals, wood to Netherlands, China , Italy , .

• Imports machinery, vehicles, meat , fruits and nut , optical instruments , iron , steel from majorly China , and Ukraine.

•Exports - $ 43455 million •Imports - $ 30144 million •Trade surplus - $ 13311 million

Recent Trends in World Trade

•China’s export rose – 7.2% in Aug and imports rose by 7%. • Manufacturing Sector regained momentum, and service sector was at five month’s high. • Global oil prices rose; due to turbulence in Libya and prospects on

Syria. •GDP growth for oil companies declined. •WTO has slashed its forecast for India’s global trade growth to 3.3% in 2013 from 4.5% . •Called for strengthening the multilateral system to enable trade to emerge as an engine to growth. • Trade growth is expected to remain sluggish in 2013 as the economic

slowdown in Europe continues to suppress global import demand. Global trade growth may touch 5% in 2014.

 India & Japan have expanded bilateral currency swap to $ 5 billion.  They had inked bilateral swap agreement for $15 bn on 4 Dec 2012.  Lead to more dollar flows.

 Russia has lifted the ban on imports of rice and peanuts after 9 months.  A positive impact on India’s export and better trade relations.

•Petroleum Minister plans to lower dollar outflow – Crude Oil Payments.

•Expected to import 11mn tones at an avg of $105 per barrel .i.e. $8.47 billion.

•India imports 44% of its crude oil from Iran, as a set of against Iran’s import(

Rice).

US Federal Reserve’s Quantitative Easing.

•A third round of quantitative easing, QE3, was announced on 13 September 2012. •Launched

a new $40 billion per month, open-ended

bond purchasing program of agency mortgage-backed securities.. •On 12 December 2012,

amount of open-ended

purchases increased from $40 billion to $85 billion per month. • On 18 September 2013, the Fed decided to hold off on scaling back its bond-buying program. •

•QE’s Impact on US• Higher inflation than desired. •Can fail to spur demand. •May depreciate US’s exchange rates versus other currencies.

not

•Does

necessarily

increase

the

aggregated money supply. •But

inflationary

system's

economy

risks

are

outgrows

mitigated the

pace

increase of the money supply from easing.

if

the

of

the

Impact on Emerging Asia •Increase in Foreign exchange reserves . •During QE 1 -Capital inflow of $9 billion per quarter .

•Increase in the monetary base (in US dollar ).

•During the QE2 period, the

increase in the

monetary base was $19 billion per quarter .

THANK YOU