28 September 2010
Optimism for Global Trade Growth Remains Steady
Access to trade finance expected to increase
Trade with Canada grows over the last 12 months
Although the outlook on the global economy has tempered over the past six months, U.S. small to mid-sized businesses remain optimistic about global trade growth. The latest HSBC Trade Confidence Index released today found that more than half (56 percent) of U.S. respondents anticipate higher trade volumes in the next six months -- only slightly less than the 58 percent of U.S. businesses that were optimistic about trade growth in the first half of 2010.
The HSBC Trade Confidence Index, the broadest international survey of small and mid-sized businesses engaged in cross-border trade, found that U.S. businesses were less optimistic about the global economy, with only 46 percent expecting economic growth over the next six months, compared to 60 percent in the first half of 2010.
“Considering some respondents’ concerns about the domestic economy, the positive sentiment among U.S. businesses about global trade prospects is encouraging and indicates that trade remains one of the key drivers of economic growth globally,” said Bill Nowicki, Executive Vice President and Head of Trade and Supply Chain North America at HSBC. “The emerging markets, and in particular Latin America and China, will provide future trade opportunities for U.S. businesses. Echoing intra-regional trade trends globally, trade between the U.S. and Canada continues to increase.”
Sentiment continues to be the highest among the emerging markets with India (140), United Arab Emirates (125), Indonesia and Mexico (both at 124) and Brazil and Vietnam (both 122), the most confident about their local economies' trade activity and growth. In the developed countries, U.S. businesses' confidence dropped slightly from 110 to 108 in the first half of 2010; however, overall developing markets are showing higher levels of confidence. All markets surveyed point toward a positive outlook, with the two lowest readings (106) in both Hong Kong and France.
Among the many key findings of the HSBC Trade Confidence Index is that U.S. businesses increasingly believe access to trade finance is improving. In fact, 25 percent of the respondents expect access to trade finance will increase slightly in the next six months; in the second half of 2009, only 16 percent made such a prediction. This indicates that companies believe that credit markets are continuing to open up as the economy stabilizes and improves.
Another significant finding is that emerging markets continue to present an enormous opportunity for U.S. exporters and importers as they lead the global economic recovery. In fact, the HSBC Trade Confidence Index revealed that:
“Global trade is a key barometer and driver of economic growth,” said Nowicki.
“Exporters and importers remain confident about trade prospects, albeit slightly less bullish than they were six months ago -- which indicates that growth in emerging markets has become more evenly paced while growth in established markets remains somewhat constrained.”
The trend for intra-regional trade between the U.S. and Canada continues to build. More than eight out of ten (86 percent) of U.S. businesses identified Canada as the nation with which they do the most trading. This is a significant increase since this time last year, only 65 percent of respondents identified Canada as their most frequent trade nation.
Nowicki said intra-regional trade and trade among emerging markets have become the lynchpin of global trade, establishing a new global trade paradigm. “To leverage the many trade growth opportunities that abound today for U.S. businesses, they should seek out insight from companies with a global footprint and deep experience on both sides of trade transactions,” said Nowicki.
Additionally findings from the HSBC Trade Confidence Index include:
The results are framed by respondents comprising of 5,124 exporters, importers and traders in 17 markets: Australia, Brazil, Canada, mainland China, France, Germany, Hong Kong, India, Indonesia, Malaysia, Mexico, Saudi Arabia, Singapore, Vietnam, UK, US and the United Arab Emirates. The data was compiled between July and September 2010. The results used to calculate an index range from 0 to 200, with 200 representing the highest confidence level, 0 represents the lowest and 100, neutral
Please see the attached report HSBC Trade Confidence Index - September 2010 for more information. The survey was conducted by research company TNS between July 19 and Sept. 1, 2010. In the U.S., the sample size included 300 small and mid-size businesses with annual turnover between US $20 million to $250 million.
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