Canada's Globe and Mail recently ran a decent survey that suggests that global export markets might be headed back into first gear after an abrupt move into reverse and neutral in the past twenty-four months. The article suggests that it's global government stimulus plans that are responsible for programs that are spurring "demand and production in economies around the world," although "the turnaround is somewhat uneven, and in some countries import growth is dramatically outpacing increases in exports, but gains in sales abroad are also expected to pick up as the worldwide recovery solidifies." Still, in many parts of the world, exports are down 10%, 15%, and even 20% from similar periods a year earlier, despite improved Q409 numbers. Global procurement and supply chain teams should pay particularly close attention to these numbers -- and what's driving them -- in large part because unanticipated 2010 demand could quickly throw off planning forecasts and estimates at all levels in the supply chain, creating disruptions.
Still, it's not worth banking on a resurging global export boom just yet. "With the exception of China, where not-yet-started infrastructure projects will mean the effects of government largesse are felt longer than in other nations … many key economies are so dependent on stimulus spending that it's too soon to gauge the staying power of their recoveries," notes an expert in the article. The volatility inherent in the situation has the potential to create not just commodity swings, but currency risk as well. This is causing, at least in Canada, a larger number of companies to leverage hedges as a means to protect themselves (19% in Q409 relative to 15% in Q209). While I've personally not observed a similar rise in the number of companies getting more serious about commodity hedging -- exchange-based or otherwise -- I suspect this will follow as commodity volatility increases.
What country-specific facts can we glean from the Globe and Mail analysis? In the US, trends suggest that "as demand from consumers and businesses recovers, imports will keep rising. The weaker U.S. dollar will help U.S. products overseas." In the UK, the only potential saving economic grace -- besides the purse strings of the Queen and her free-spending MPs -- is a weak pound, which "may eventually boost British exports." In Canada, besides the saving economic grace of two procurement and supply chain bloggers contributing to the economy, the "trade picture" has a long way to go, "with exports down 19 percent from November 2008." In China, a supposedly rapid recovery -- don't believe all the government hype, I say -- may prove risky. Here, import gains may provide "more evidence that China is at risk of overheating. Export growth may increase calls for China to let its currency appreciate against the greenback."
All in all, the trade picture is anything but clear and consistent. Whether the results of stimulus or not, however, there are some positive signs that things are coming off bottom. Just don't go waving the broad-scale recovery flag just yet (however prudent it would be to think long and hard about your global commodity, currency, and supplier risk management strategies in the event of a sustained recovery).