A positive outlook

The Hongkong and Shanghai Banking Corporation (HSBC), one of the world’s largest banking and financial services organisations, recently issued its Global Trade Forecast report. Here are some of the highlights.

GLOBAL TRADE IS on the road to recovery. Over the next two years, merchandise trade growth is set to regain its pre-financial crisis vigour, accelerating from 2.5 per cent in 2013 to 8 per cent in 2016. This upward swing is driven by the strengthening recovery in the US and Europe and the long-term expansion of emerging economies, particularly in Asia and Latin America.

A survey of 5,800 importers and exporters from 25 countries indicates a new optimism after years of desultory growth, but it is tempered by caution. While it may not come as quickly as some would like, the recovery of Western markets looks strong. Emerging markets, however,are facing a number of challenges and remain more exposed to geopolitical risks such as the uncertainty in Eastern Europe and the Middle East.

The long-term prospects remain bright, and HSBC’s current Trade Forecast predicts that global merchandise trade will almost triple by 2030, driven largely by emerging markets.

Despite the short-term challenges emerging markets face, they have the vitality and ability to rebound from setbacks, and this is driving long-term trade growth and changing the architecture of global trade itself.

According to data from the United Nations Conference on Trade and Development (UNCAD), year- on-year merchandise trade has grown on average less than 1 per cent (0.98%) a quarter since the beginning of 2008 in developed economies and more than 4 per cent (4.03%) in developing economies.

This difference represents the growth in trade between developing nations, which is being driven by two self-reinforcing trends: the increasing atomisation of global supply chains and the rise of the emerging market consumer.