More NewsTrade Growth Boost Expected from 2014, According to HSBC

Trade Growth Boost Expected from 2014, According to HSBC

International trade growth will accelerate from 2014 as the global economy ends a period of growth contraction, according to HSBC’s Global Connections Trade Forecast. The forecast predicts international businesses will recover more rapidly and increase their trade activity earlier than previously expected. This results in predicted trade growth of 86% from 2012 to 2026, taking total trade activity in 2026 to US$53.8 trillion.

The acceleration in trade growth is driven by two key trends: trade fuelling trade and corridor Creators. In trade fuelling trade, the report predicts the rapid growth of sectors that support world trade. Eight of the top 10 emerging fast growth sectors fall in to this category, including containers and packaging (9.02% predicted annual growth) reflecting a greater transportation of goods around the world and binding products for foundries (8.85% predicted annual growth) which tracks trade of the moulds used to create iron/steel infrastructure products required by the increasing number of railway, road and building infrastructure projects, which then directly facilitate further international trade. Demonstrating this trend, Thailand is seeing predicted annualised growth to 2016 of tugboat exports (22.05%) and export of railway service vehicles (20.36%) to countries within the Asia-Pacific region, which will in turn support the development of their trade infrastructures.

Corridor creators are businesses searching out the best trade partners to drive competitive advantage, regardless of location, defining their own trade routes and corridors. For example, Indian businesses are opening up trade in pharmaceuticals with Africa and emerging Asia, creating new corridors in the Southern Silk route (exports of medicines from India to Ghana and Indonesia are predicted to grow annually to 2016 by 11.85% and 8.84% respectively). These innovative businesses are the ones to watch as they help to redefine how individual nations and regions are defined. This is evidenced by the growing trade relationship between Germany and Latin America within the automotive sector. Germany is using existing relationships with Mexico to forge new links within Argentina.

Alan Keir, group managing director and global head, HSBC Commercial Banking, said: “The international business world isn’t prepared to sit back and wait for the outcome of ongoing conversations about economic recovery. Today forward-thinking companies are leading the way, where once businesses followed economic investment. Whether taking advantage of shorter-term growth in international trade, which despite economic uncertainty sits at US$1 trillion a year, or by creating new supply chains that open up trade corridors, businesses are connecting themselves to future opportunities.”

HSBC’s Global Connections highlights how innovative business activity is reshaping the trading world. It identifies new and emerging trade hubs – countries that are developing or expanding their role as gateways in key trade corridors or between regions. Egypt, for example, is identified as a fast growing trade nation, due in part to its role as a route between Africa and Europe. This growth is underpinned by a stabilising political situation and investment in infrastructure. Turkey and Malta are already known as gateways between Europe and the Middle East, and the report shows that their trade activity continues to grow. In addition, Panama will have a greater role as a global trade hub as the canal’s widening enhances shipping lanes to both Singapore and between North and South America.

Keir said: “The speed at which international businesses will have to grow their revenue, contacts, assets, operations and workforce to achieve this level of predicted growth may feel challenging for some, but we believe that it is achievable if they take advantage of the significant international growth opportunities outside their traditional markets. In the short-term, the rapid pace of economic development in emerging nations, coupled with slow domestic growth in developed nations, will continue to drive this trend. The companies that succeed will be factoring this in to their planning today. At HSBC we are working with companies to help them to realise their international business ambitions and full potential. In fact we have committed to facilitating US$750bn of world trade by 2013.”

HSBC’s Global Connections also finds:

  • Trade growth in Latin America is predicted to grow at a third more than predicted for the rest of the world which reflects strong infrastructure development in the region.
  • Investment in skills and innovation has a significant impact on a country’s ability to develop higher-end production and its longer-term ability to grow trade.
  • Emerging trade corridors suggest that North America will be reducing reliance on China with Vietnam, Indonesia, Turkey and Poland all emerging as key trade partners.
  • Within the Middle East and north Africa region (MENA), Oman and Qatar are experiencing growth in infrastructure development and as a result, feature in the top 10 key emerging growth partners in the MENA region.
  • The largest emerging trading partner for Europe is Vietnam and in the coming years China is set to become a pivotal partner; overtaking the UK as the sixth-largest trading partner with Europe in 2012, and representing a substantial volume and value of trade in the region.
  • Of Asia Pacific’s top 10 largest exporters and importers, eight are from within the region – China, Japan, South Korea, Hong Kong, Thailand, Malaysia, Indonesia and Singapore – demonstrating the role that intra-regional trade is playing amongst these countries.

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