Global trade to rebound: HSBC

HSBC’s Trade Forecast outlines a dual-speed trade rebound as South-South corridors become more established, driving growth to 2015 before being rejoined by the developed world in the later part of the decade.

The report shows that internationalization will then intensify as we enter the next decade (2021-30), as businesses optimize their global supply chains to compete around the world.

Read: Emerging outpacing developed markets By 2020, HSBC expects forward-thinking companies worldwide to have exploited multiple trade corridors and partnerships, created effective networked supply chains, and tightened efficiency and operations as a result. This trend continues through 2021-30, contributing to a stabilizing of trade growth which also reflects the growing maturity of emerging markets.

Read: Economic lessons from emerging markets According to the Trade Forecast, powerhouses India and China will be joined by emerging trading nations including Vietnam, Indonesia, Egypt, Turkey, Mexico and Poland to record significant trade growth in the next three years. As these economies industrialize, there is an increase in trade of higher value goods, reflecting the increased maturity of these faster-growing economies with large populations and rapidly growing middle-class consumer markets.

“As Canada is a major exporter of commodities and natural resources, the rapid industrialization of many Asian economies and demand for raw materials presents opportunities for Canadian companies doing business internationally. It is important that Canadian companies take advantage of these opportunities as trade activity between Canada and the United States slows due to softening US demand and the strong Canadian dollar,” says Linda Seymour, executive vice president and head of Commercial Banking, HSBC Bank Canada.

Read: It’s risk-on again for emerging markets

The latest HSBC Trade Confidence Index (TCI) shows that close to nine in ten businesses in Canada (88%) expect trade volumes to remain steady or increase, while just under half (49%) will expect business to grow over the next six months. Eurozone troubles have not had a significant impact on Canada’s trade with Europe, as all European countries have seen an increase in trade flows from Canada over the past six months.

Read: The risk in emerging markets is ignoring themIn addition, the report highlights that:

• India is the fastest-growing source for Canada’s importers (82%) and is expected to be so until 2020, followed by Malaysia (80%), Vietnam (69%), Mexico (64%) and Turkey (51%).
• Poland and Saudi Arabia tied as the fastest-growing destinations for Canadian exports (81%), followed by UAE (42%), China (22%) and Australia (19%).
• Malaysia is forecast to see strong growth in trade to Latin America in the years to 2020, at approximately 9% in the period 2016-20, underpinned by a greater sophistication in the products imported by the continent, particularly in electronic goods. Exports to Brazil are predicted to grow 14% annualized over the same period.
• Turkey and Egypt are expected to demonstrate dynamic export performance to 2020. Benefitting from a rapidly expanding export base, lower energy costs (short term) and an important ‘trade hub’ position, both will see export trade growth of over 12% 2013-15. Turkey’s trade growth will continue 2016-20 as prospects improve in Europe, and remain at a steady 9% a year between 2021 and 2030.
• Vietnam is expected to record double digit annualized trade growth throughout the forecast period 2012-30

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