Import volumes in developed economies remain relatively robust, according to the HSBC Trade Forecast
Trade is expected to recover in 2016, with global growth in merchandise trade rising to around 3 per cent, according to the latest HSBC Trade Forecast.
This expansion will be driven by developed markets, although in the longer term emerging economies are likely to take the lead as trade growth accelerates further. New agreements to liberalise trade could provide a further potential boost, the report says.
The Trade Forecast, modelled for HSBC by Oxford Economics, predicts world merchandise trade will grow just 1 per cent in 2015, down from 3.1 per cent in 2014. This would be the lowest annual growth rate since 2009. But the report concludes that the recent slowing of global trade is cyclical, rather than structural, estimating that growth in trade of goods will recover to around 3 per cent in 2016 before rising to 5 per cent a year between 2018 and 2020.
While in the short term the outlook for trade is challenging, over the longer term there are reasons for optimism
A slowdown in Chinese manufacturing and weaker imports in emerging markets are some of the causes of recent sluggish trade growth, according to the report. Merchandise imports for 2015 are expected to contract by 6 per cent in China and 8 per cent in Brazil. But import volumes in developed economies remain relatively robust: they are forecast to grow by between 5 to 6 per cent in the US and Western Europe in 2015.
Continued economic growth, investment and consumption in the US and the eurozone are expected to drive trade expansion for the next couple of years. Emerging economies will be the driving force in the longer term, however. The report predicts that Asian nations with young populations and rising incomes will lead the way. Goods exports from India and Vietnam are expected to exceed 10 per cent a year between 2021 and 2030.
Efforts to liberalise trade could also have a positive impact if fully implemented. The recently expanded World Trade Organization (WTO) Information Technology Agreement now guarantees duty-free trade in electronics products worth around USD1.4 trillion each year. In addition, 12 nations have negotiated the Trans-Pacific Partnership, a new trade agreement to bring down tariffs and barriers across an area that represents 40 per cent of global GDP. A WTO Trade Facilitation Agreement, due to be ratified by member states, promises to simplify customs procedures, making it cheaper and easier to trade goods across borders.
Stuart Tait, Global Head of Trade and Receivables Finance, HSBC, said: “While in the short term the outlook for trade is challenging, over the longer term there are reasons for optimism, as the outlook for the next few years and beyond picks up. We are working with businesses around the world to position them to take advantage of the recovery.”
For more information and to read the full HSBC Trade Forecast, visit the HSBC Global Connections website.
The HSBC Trade Forecast is modelled by Oxford Economics for HSBC. Oxford Economics produces a global report and country-specific reports on the following 23 countries and territories: Hong Kong, China, Australia, Indonesia, Malaysia, India, Singapore, Vietnam, Bangladesh, Canada, the US, Brazil, Mexico, Argentina, the UK, France, Turkey, Germany, Poland, Ireland, the UAE, Saudi Arabia, and Egypt. The global report also includes analysis of trade with Japan and Korea.