Merchandise trade growth to rely on developed markets in the near term**
Faster expansion from 2017 on south-south commerce, liberalisation deals **
Special focus on the ITA: electrifying trade in next generation ICT products**
Advanced economies look set to sustain global commerce through 2016 before an emerging market recovery, and potentially a series of game-changing trade liberalisation agreements, accelerates growth back to levels last seen before the financial crisis, the latest HSBC Trade Forecast shows.
From an average of 1.5 per cent annual growth between 2012 and 2014, world merchandise trade should increase by about 8 per cent a year from 2017, according to the report. Although that’s still below the 9 per cent pre-crisis pace of expansion, the conclusion of additional World Trade Organisation accords – plus the proposed Trans-Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) and Regional Comprehensive Economic Partnership (RCEP) – could have a significant additional impact.
“In the short term an increasingly robust US economy, aided by cyclical upturns in Europe and Japan, are likely to provide the greatest cross-border opportunities for businesses,” said Simon Cooper, Chief Executive of HSBC Commercial Banking.
“Further out, demographic trends in emerging markets will undoubtedly fuel greater ‘south-south’ trade, meaning companies should adopt a diversified strategy spanning both developed and developing markets. If ratified, the international trade deals currently under negotiation could also have a major catalytic effect - one that’s hard to quantify but that should give businesses plenty of reasons for optimism.”
Amongst the 25 economies analysed for the HSBC Trade Forecast, trade expansion is expected to be strongest in India and Vietnam over the medium term. The value of goods exported from these countries may increase by an average of more than 10 per cent a year from 2015 to 2030 as Asian nations, plus other emerging market economies such as Turkey, Egypt, Mexico and the UAE, drive trade growth. Demand for capital goods, particularly in emerging markets, bodes well for companies that make and trade in machinery and transport equipment.
Downside risks to the outlook include delays to the negotiation and implementation of trade liberalisation agreements and the continued shortening of global supply chains; such as the trend to re-shore production and so reduce cross-border traffic in intermediate manufactured goods. Given that some studies show free trade measures contributed around 20 per cent of the growth in global commerce in the decade to 2004, this HSBC Trade Forecast places a special focus on plans for the electronics industry: