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HSBC Trade Confidence Index Reveals Positive Outlook on Global Economy Among Small and Mid-Market Businesses Worldwide
29 September 2009
US Seen Among Most Promising Regions for Growth;
Most US Businesses Expect Equal or Greater Near-Term Access to Trade Finance
The latest HSBC Trade Confidence Index uncovered growing confidence in the state of global trade, indicating that exporters and importers might be seeing the start of an economic recovery. The HSBC Index joins the growing list of indicators pointing toward a pickup in economic activity.
The HSBC Trade Confidence Index, which surveyed over 3,500 small and mid-market businesses (SMEs and MMEs) in 12 major global markets, showed an overall positive outlook with an average global reading of 110 on a scale of 0 to 200, with 100 as a neutral reading. Sentiment was highest across emerging and developed economies, with mainland China, Indonesia and the United Arab Emirates expressing the most confidence in trade activity and growth. Among the developed economies, US businesses expressed the greatest confidence in the near-term outlook for growth in trade. Respondents see the US as the most promising export market in the next three months, a sign of confidence in the US economic recovery.
Over 40 percent of SMEs and MMEs surveyed in the United States expect an increase in trade volumes over the next three months (41%). Half of the US survey respondents foresee slight or significant growth in the global economy over the same time period.
Of particular interest, US companies expressed greater confidence for near-term growth in trade within the domestic and Canadian markets than other regions worldwide. This trend may stem from concerns over the weakening US dollar, which makes the cost of imported goods more expensive. Fluctuating foreign exchange rates were one of the most commonly cited barriers to trade by businesses worldwide as well as within the United States.
Access to credit did not rank among the major concern of businesses, providing another indication of a potential support for an economic recovery. Worldwide, exchange rates, product demand and profitability often ranked ahead of availability of credit as a barrier to growth in trade.
William Nowicki, Head for Trade and Supply Chain for HSBC - North America, said: "We are seeing signs of what could be the start of a global trade recovery. Our survey shows that globally, companies expect more orders and better access to credit and hold a stable outlook on buyer and seller risks. In the US, 70 percent of respondents indicated that their "buyer risk" outlook will probably remain the same in the short term. In the event this outlook should change, respondents recommended that their companies engage in less business with particular buyers as the most effective solution. However, while overall outlook is positive, it is too early to tell if the rebound is sustainable."
In summary, the HSBC Trade Confidence Index found a range of signs in support of a positive global trade outlook:
- Most respondents worldwide expect good access to credit with over half (59%) saying it will stay the same and around a third (31%) saying access will increase. Almost 90 percent of US businesses expect the same or greater access to trade finance over the next three months;
- The number of respondents expressing trade volumes to grow (44%) outnumber those who expect a contraction (15%), on average 3:1;
- About one-third (32%) of respondents expect their need for trade finance to increase, especially in India (44%), South-East Asia (41%) and the UAE (37%);
- At least four in 10 respondents expect banks to meet future trade finance needs, except in the UK, where 45 percent will rely on their own capital compared to 29 percent who will seek bank support; and
- The majority of respondents expect buyer default risk (69%) and supplier non-delivery risk (75%) to remain stable, although more respondents expect an increase in buyer risk (17%) than supplier risk (12%).
Mr. Nowicki said: "In a downturn, concerns relating to buyers' financial capabilities tend to be more pronounced than seller risks. Advance payment stands out as a risk management strategy in South-East Asia and the US. Banks continue to play a full role in global trade recovery, especially in developing economies where the financial systems remain relatively robust. Strongly capitalized banks like HSBC will continue to have the appetite and the capability to support customers' trade finance needs as confidence and activity return."
Globally, companies continue to cite fluctuating foreign exchange and weak product demand as key challenges to business growth in the next three months. Foreign exchange volatility is the top concern for respondents in Brazil (58%), the UK (56%), South-East Asia (53%) and Greater China (42%), while lack of demand is the major barrier for the US (36%) and Australia (40%). Forty-five percent of Indian traders and 35 percent of UAE traders are worried about insufficient profit margins and availability of credit, respectively.
More details on the survey
Please see the attached report HSBC Trade Confidence Index - September 2009* for more information. The survey was conducted by research company TNS in August and September 2009. In the US, the sample size included 300 small and mid-size businesses with annual turnover between US $20 million to $250 million.
Notes to editors:
HSBC Trade and Supply Chain
HSBC Trade and Supply Chain is one of the largest trade services organizations in the world. Our award-winning international trade expertise combines over 140 years of extensive experience in international trade with a unique blend of local knowledge, supported by advanced technology and our extensive network of dedicated trade services offices in over 60 countries and territories worldwide.
About HSBC Bank USA, N.A.
HSBC Bank USA, National Association operates more than 460 bank branches throughout the United States, with approximately 380 in New York state as well as branches in Connecticut, Washington D.C., Florida, New Jersey, Maryland, Virginia, California, Delaware, Illinois, Oregon and Washington State. HSBC Bank USA, N.A., with total assets of $250.8 billion, offers its four million plus retail customers access to global markets and services. The bank provides a full-range of banking products and services to individuals, corporations, small businesses, institutions and governments through its personal financial services, commercial banking, private banking and global banking and markets segments. The bank is also an international dealer in capital market instruments and has mortgage banking, insurance and brokerage operations.
HSBC Holdings plc
HSBC Holdings plc, the parent company of the HSBC Group, is headquartered in London. The Group serves customers worldwide from around 8,500 offices in 86 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa. With assets of US$2,422 billion at 30 June 2009, HSBC is one of the world's largest banking and financial services organisations. HSBC is marketed worldwide as 'the world's local bank'.
Click here* to view the HSBC Trade Confidence Index in .PDF format.
- Juanita Gutierrez
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