*Malta’s trade forecast to grow 83.80% to 2026

*International trade to continue to grow at $1trillion a year in the short term

According to the latest HSBC Global Connections Trade Forecast,Malta’s trade is forecast to grow 83.80% by 2026 at an annualised rate of 0.69% to 2016, increasing substantially, between 2017 – 2021, at 5.65%.

Malta is exposed to the present fluctuations in world trade that result from the general economic climate firstly because of its role as a hub between major trading routes, and secondly as all its businesses are exposed to international markets in some way; it has no natural resources of its own. Annualised total trade growth inMaltaover the next 15 years will be 3.31%, which is the rate at which companies will need to increase their international activities if they are to keep pace with this change.

International trade growth will accelerate from 2014 as the global economy ends a period of growth contraction, according to HSBC’s Global Connections Trade Forecast.  It finds international businesses will recover more rapidly and increase their trade activity earlier than previously expected.  This results in predicted trade growth of 86% from 2012 to 2026, taking total trade activity in 2026 to $53.8 trillion compared to a predicted $28.9 trillion for 2012.

The acceleration in trade growth is driven by two key trends: ‘Trade Fuelling Trade’ and ‘Corridor Creators’.  In ‘Trade Fuelling Trade’ the report predicts the rapid growth of sectors that support world trade.  Eight of the top 10 emerging fast growth sectors fall in to this category, including ‘Containers and Packaging’ (9.02% predicted annual growth) reflecting a greater transportation of goods around the world and ‘Binding Products for Foundries’ (8.85% predicted annual growth) which tracks trade of the moulds used to create iron/steel infrastructure products required by the increasing number of railway, road and building infrastructure projects, which then directly facilitate further international trade. Demonstrating this trend,Thailand is seeing predicted annualised growth to 2016 of tugboat exports (22.05%) and export of railway service vehicles (20.36%) to countries within the Asia Pacific region, which will in turn support the development of their trade infrastructures.

‘Corridor Creators’ are businesses searching out the best trade partners to drive competitive advantage, regardless of location, defining their own trade routes and corridors.  For example, Indian businesses are opening up trade in pharmaceuticals with Africa and emerging Asia, creating new corridors in the Southern Silk route (exports of medicines fromIndiatoGhanaandIndonesiaare predicted to grow annually to 2016 by 11.85% and 8.84% respectively). These innovative businesses are the ones to watch as they help to redefine how individual nations and regions are defined. This is evidenced by the growing trade relationship betweenGermanyandLatin Americawithin the automotive sector.Germanyis utilising existing relationships withMexicoto forge new links withinArgentina.

Alan Keir, Group Managing Director and Global Head, HSBC Commercial Banking, said: “The international business world isn’t prepared to sit back and wait for the outcome of ongoing conversations about economic recovery.  Where once businesses followed economic investment, now, forward-thinking companies are leading the way.  Whether taking advantage of shorter-term growth in international trade, which despite economic uncertainty sits at $1trillion a year, or by creating new supply chains that open up trade corridors, businesses are connecting themselves to future opportunities.”

In order to achieve the forecast’s growth predictions businesses will need to increase international activity by an average of 4.70% a year.  More rapid annual growth is forecast in the top 10 emerging sectors of:

HSBC’s Global Connections highlights how innovative business activity is reshaping the trading world.  It identifies new and emerging Trade Hubs – countries that are developing or expanding their role as gateways in key trade corridors or between regions. Egypt, for example, is identified as a fast growing trade nation, due in part to its role as a route between Africa andEurope.  This growth is underpinned by a stabilising political situation and investment in infrastructure. Turkey andMalta are already known as gateways between Europe and theMiddle East, and the report shows that their trade activity continues to grow. In addition,Panama will have a greater role as a global Trade Hub as the Canal’s widening enhances shipping lanes to bothSingapore and between North andSouth America.

Mark Watkinson, Chief Executive Officer, HSBC Bank Malta said: “The speed at which international businesses will have to grow their revenue, contacts, assets, operations and workforce to achieve this level of predicted growth may feel challenging for some, but we believe that it is achievable if they take advantage of the significant international growth opportunities outside their traditional markets.  In the short-term, the rapid pace of economic development in emerging nations, coupled with slow domestic growth in developed nations, will continue to drive this trend.  The companies that succeed will be factoring this in to their planning today. At HSBC we are working with companies to help them to realise their international business ambitions and full potential. In fact we have committed to facilitating $750billion of world trade by 2013.”

Michel Cordina, HSBC BankMalta’s Head of Commercial Banking said, “At HSBC Malta our specialised trade teams will be working closely with the companies to help them meet the challenges ahead and to internationalise their business as trade picks up and the momentum accelerates. Malta’s trade tracks closely to the world’s trade index and increases are expected to rise steadily over the next 15 years.”

HSBC’s Global Connections also finds:

• Trade growth inLatin Americais predicted to grow at a third more than predicted for the rest of the world which reflects strong infrastructure development in the region
• Investment in skills and innovation has a significant impact on a country’s ability to develop higher-end production and its longer-term ability to grow trade
• Emerging trade corridors suggest that North America will be reducing reliance onChinawithVietnam,Indonesia,TurkeyandPolandall emerging as key trade partners
• Within the Middle East and North Africa region,Oman,LibyaandQatarare all experiencing growth in infrastructure development and as a result, feature in the top 10 key emerging growth partners in the MENA region
• The largest emerging trading partner for Europe isVietnamand in the coming yearsChinais set to become a pivotal partner
• Of Asia Pacific’s top 10 largest exporters and importers, eight are from within the region -China,Japan,South Korea,Hong Kong,Thailand,Malaysia,IndonesiaandSingapore– demonstrating the role that intra-regional trade is playing amongst these countries.

For a copy of the global report and for further information, log onto www.hsbc.com/tradeconnections