Exporters are more confident than they were six months ago because of a strong recovery in industrialised economies, according to the latest HSBC Trade Forecast. However, despite improvements in developed countries, emerging economies are still expected to lead trade growth over the long term.
The HSBC Trade Forecast, modelled by Oxford Economics for HSBC, is based on HSBC’s analysis and forecasts of the world economy. It is published alongside the HSBC Trade Confidence Index, conducted by TNS, the market researchers, on behalf of HSBC. The index measures businesses’ confidence about their prospects for trading activity over the next six months. The latest headline index was 113, up from 112 in October 2013. A reading above 100 signals an anticipated expansion in trade.
The longer-term trend for emerging markets remains one of growth and businesses need to consider now how best to capitalise on long-term trade opportunities
The improvement was led by growing confidence in the near-term outlook for trade among key industrialised nations such as the UK and US. Businesses in the emerging markets of Latin America and the Middle East reported a slight drop in trade optimism from six months ago. Asian confidence remained unchanged.
Longer-term prospects for emerging markets remain strong, however, according to the Forecast. It suggests that Asia, the Middle East and Latin America will drive growth in global merchandise trade, which will average 8 per cent a year from now until 2030.
China already accounts for almost 20 per cent of the total merchandise trade among the 25 countries covered by the Forecast, and this share is expected to rise. India is expected to become the world’s fourth largest exporter of goods by 2030.
Emerging markets are also rapidly increasing their investment in research and development. China spends the equivalent of 1.8 per cent of its GDP on research and development, nearly double the level of 20 years ago.
In industrialised markets, by contrast, research investment has largely stagnated as a share of GDP over the past 20 years. The Forecast suggests that they will face growing competition from emerging economies in increasingly sophisticated sectors.
James Emmett, Global Head of Trade and Receivables Finance, HSBC, said: “Whilst we are seeing a contrasting short-term trade outlook, the longer-term trend for emerging markets remains one of growth and businesses need to consider now how best to capitalise on long-term trade opportunities. An important element of this is investing in research and development, which will allow emerging markets to scale the global value chain. Importantly, developed economies need to enhance their research and development spend if they are to remain competitive.”
The HSBC Trade Forecast is modelled by Oxford Economics for HSBC. Oxford Economics produces a global report, plus regional reports and country-specific reports on 25 countries and territories key to world trade.
The HSBC Trade Confidence Index is conducted by TNS on behalf of HSBC in a total of 23 markets. It is based on a survey of 5,800 exporters, importers and traders from small and mid-market enterprises on: trade volumes, risk to suppliers, need and access to trade finance, impact of exchange rates and regulation. The fieldwork for the current survey was conducted between November and December 2013.
For more information and to read the full HSBC Trade Forecast, visit https://globalconnections.hsbc.com/global/en/tools-data/trade-forecasts/global.