After a challenging 2012, the HSBC Trade Forecast is outlining 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, released Wednesday, 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.
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.
Canada poised to benefit from growing demand in Asia
According to the report, 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.
Linda Seymour, executive vice president and head of Commercial Banking, HSBC Bank Canada said: “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 U.s. demand and the strong Canadian dollar.”
The report highlights India’s critical role in world trade growth over the entire period. India represents the fastest growing import or export partner (or both) between 2013-15 or 2016-2020 for the 23 markets studied in the trade forecast, including Canada. India’s trade growth can be linked to its growing consumer wealth and emerging middle class; investment in its infrastructure development; the impact of Foreign Direct Investment (FDI); its diverse range of exports and a move to produce goods higher up the value chain, and its developing role as a supply chain hub for Asia.
Echoing the trade forecast, the latest HSBC Trade Confidence Index (TCI) of exporters reveals greater confidence among emerging nations, led by India. Businesses in these markets are exploring new trade corridors, finding new trade partners and new trade networks from which to grow. Businesses in developed countries are — unsurprisingly — less confident about trade prospects.
The TCI also 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.