Business sees end to global trade slump with US, Europe to lead

HONG KONG - After a sharp slowdown this year as emerging markets demand stalled, businesses expect to see the West lead a tentative recovery in global trade that should broaden and accelerate over the medium term, two new indicators from HSBC show.

Whilst the global Trade Confidence Score fell four points to 120 in the second half of 2015, the majority of businesses surveyed (64%) still expect merchandise trade volumes to increase over the next six months. 

Looking further ahead, HSBC;s bianual Global Trade Forecast sees import growth in the US and Europe laying the foundations for a moderate rebound that will gain pace as economic conditions in China stabilise.

Stuart Tait, Head of Global Trade and Receivables Finance at HSBC, says what is interesting is that recent subdued trade performance is more consistent with a period of economic recession than of recovery. “But we’re not in a global recession, and this gives us reason to see this as a transitional downturn, in which we’ve passed the lowest point.”

The Forecast points to five global trends that will have a positive impact - stabilisation of China’s economy; stronger investment spending supporting solid growth of import demand in developed markets; cyclical recovery in key sectors; trade liberalisation gaining traction; and expanding opportunities for growth in services trade.

According to the report, despite near-term challenges facing leading emerging markets, especially China and Brazil, many emerging economies benefit from strong economic fundamentals. This means they are likely to be an important driver of global economic growth and trade over the medium-term.

The economies of Asia are still expected to be the main drivers of global trade over this time period, with ‘south-south’ flows representing the fastest-growing trade corridors.

Cyclical sectors such as transport equipment are expected to be the greatest beneficiaries of the upturn in the near term, although intermediate inputs such as chemicals and machinery will increasingly benefit as global investment strengthens. www.hsbc.com (ATI).