The new Global Connections report from HSBC Commercial Banking predicts a tipping point in the balance of trade power where imports will grow faster than exports in ’emerging’ markets within the next five years. This will signify a shift, where traditionally export driven countries are now starting to see imports rise, driving developed and emerging market growth.
The Global Connections Trade Forecast reflects this; inChina,IndiaandBrazil, the rate of growth in imports will exceed that of exports over the next five years, continuing to 2026. In contrast theUS,UK,FranceandSpainare expected to see export growth exceed the rate of imports over the 15 year period.
In addition,GermanyandChinaare set to leapfrog theUSto become the world’s largest importers by 2026, whileIndiais predicted to leap from 15th to 10th place by 2026. Some of the fastest growing importers to 2016 are expected to beBrazil,India, andIndonesia
The report also suggests businesses’ short-term outlook for the global economy is positive, especially in the emerging markets. According to HSBC’s study of current international business sentiment, the Trade Confidence Index, 71% of respondents believe the global economy will remain stable or grow in the next six months. A key driver of this outlook is the confidence of traders in the emerging markets; only one country from the traditional ‘developed markets’ appears in the top ten most confident countries.
Supporting the rebalance of global trade, growing emerging-to-emerging market trade corridors are reshaping trade routes and creating powerful networks outside of developed markets. This is helping these countries to better withstand the slowdown in trade in the developed world.
Already in Asia Pacific 10 of the top 15 global trading partners are countries from within the same region, and this trend is expected to strengthen. Nine ofChina’s 15 largest import partners and six of its fastest growing partners to 2016 come from the same region. The top six fastest growing export destinations forIndiato 2016 are either in Asia or theMiddle East.
Latin America is looking outside of its own borders and turning towardsAsiafor its trading needs, with nine out of the top 15 trading partners falling from outside of the region. Latin America’s top five fastest growing import partners to 2016 areIndia,China,Thailand,IndonesiaandSingapore. Six of the top 10 fastest growing export destinations forBrazilto 2016 are either Asian or Middle Eastern countries.
Alan Keir, HSBC Group Managing Director and Global Head Commercial Banking commented on the data: “Many of the faster growing markets around the world have clearly established themselves as a long term driving force behind global trade. They have a key role in world growth and their demand will lead the way. This new Forecast and our latest Confidence Index help us to understand how demand patterns and optimism are changing and how these seismic shifts are re-balancing the global economy.”
“Despite the Index showing broad optimism about what the next six months hold, businesses cannot afford to be spectators on these significant trade changes. The message for international businesses, small or large, is to understand the long term picture. Those in developed nations have to look beyond their borders at the opportunities in rapidly growing markets, while emerging market businesses need to access the growth of these new trade powerhouses closer to home.”
Michel Cordina, Head of Commercial Banking at HSBC Bank Malta said: “This report confirms the significant growth in trade and economies of the faster growing and emerging markets. This augurs well for HSBC Bank Malta’s vision to increase Malta’s connectivity with such markets by leveraging the strength of HSBC Group in these territories and offering Maltese businesses new made opportunities to grow their business.”
The Forecast data also reveals that sector growth is greatest in those which correlate to economic development. Automotives, Non-Crude Oil, Medicines and Printing will be the sectors that dominate world trade over the next 15 years and emerging countries are leading the growth.
For more information on the HSBC Global Connections report and specific country reports visit http://globalconnections.hsbc.com/news-insights/emerging-market-import-growth-drives-rebalancing