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Global Infrastructure Demand to Drive U.S. Trade Higher
**HSBC U.S. Trade Confidence Index rises to all time high**
** Latin America is most promising region for U.S. export growth in near term**
07 October 2013
New York, NY - U.S. business leaders expect trade to rise in the next six months as global economic conditions improve and demand for infrastructure goods soars, according to the latest data from the U.S. HSBC Global Connections Trade Report.
U.S. businesses reported increased confidence in near term trade prospects, pushing the HSBC Trade Confidence Index from 107 to 114, an all-time high since the index's inception, and higher than the global index average of 112. The index is an international survey of small and middle market businesses, including about 300 in the U.S., engaged in cross-border trade. Additionally, 67 percent of U.S. business leaders surveyed expect export and import volumes to rise in the next six months, up from 48 percent in the second half of 2012, and 29 percent cited improved global economic conditions as the main reason for increasing business, the report finds.
According to the report, which includes short-, mid-, and long-term trade outlooks, industrial machinery and transport equipment are expected to be the top U.S. export growth sectors, accounting for 35 percent of the growth in exports over the next three years. Globally, infrastructure trade is set to triple by 2030, growing at an average annual rate of nine percent from 2013 to 2030, and accounting for 54 percent of total global exports goods by 2030, up from 45 percent in 2013. Infrastructure trade includes infrastructure goods - the materials needed for infrastructure projects, and investment equipment - the machinery required by businesses to boost production.1
"Infrastructure is the bedrock that enables economic activity," said Steve Bottomley, Group General Manager and Head of Commercial Banking in North America for HSBC. "The investment countries are making in infrastructure is phenomenal and provides a huge opportunity for U.S. businesses looking to grow and develop. By connecting businesses to international opportunities and markets, HSBC is helping U.S. companies capitalize on this trend as well as spur economic growth."
And despite a recent slowdown in emerging markets, most U.S. business leaders see Latin America (20 percent) as the most promising region for export trade growth in the near term, followed by China (13 percent) and Canada (six percent), the HSBC report shows.
"The U.S. has good access to a wide range of export markets because of its geographical position, openness to trade and competitiveness, especially in transport equipment and industrial machinery." said Prabhat Vira, Regional Head of Global Trade and Receivables Finance in North America for HSBC. "Rising middle classes across Asia's rapidly emerging markets will drive significant infrastructure demand in the region. And as China looks to scale the value chain in terms of the goods it manufactures, there is a strong opportunity for developed economies like the U.S. to supply sophisticated investment equipment to the country's producers."
Transport equipment helping power U.S. export growth to China
In fact, the HSBC Trade Forecast shows that U.S. transport exports to China are expected to rise by over 10 percent to the 2030s. Other export findings include:
- U.S. exports to China will more than double over the next decades, from seven percent today to 18 percent in 2040;
- Canada is and will remain the most important export market for the U.S. in the next two decades;
- Average growth in U.S. exports will be close to six percent annually to 2030
Need to renew or replace capital stock fueling U.S. import growth
Demand for infrastructure products in developed markets remains strong because economies like the U.S. must renew and replace existing capital stock to maintain their own competitive advantage in supplying investment goods to the rest of the world, the report shows. In fact, U.S. imports of transport equipment and information, communications and technology equipment are set to account for over half the growth in U.S. imports in the long term, the report finds. Other import findings include:
- By 2020, India will overtake the U.S. to become the lead importer of goods for infrastructure, as it invests to builds its domestic networks, and China will outpace the U.S. to become the top importer of investment equipment, as it invests to boost its manufacturing productivity.
For a copy of the U.S. Global Connections Report, please visit http://www.globalconnections.hsbc.com/. Additionally, for the first time, U.S. businesses can map trade flows and sector growth trends via a new, free HSBC Trade Forecast Tool available at https://globalconnections.hsbc.com/global/en/tools-data.
An infographic which portrays key findings from the latest trade forecast is also available upon request.
Notes to editors:
1 To equip for growth, countries around the world need:
- Goods for infrastructure e.g. metals, minerals, buildings and transport equipment
- Investment equipment e.g. specialised machinery, machinery for power generation, metal working machinery, office equipment, electrics and professional/scientific instruments
About the HSBC Trade Confidence Index (TCI)
The TCI is an international survey of small and mid-market businesses engaged in cross-border trade and the largest trade confidence survey globally. The TCI is prepared by TNS for HSBC. The TCI is drawn from the viewpoints 5,800 exporters, importers and traders from small and mid-market enterprises on: trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange on their businesses. Views were gathered from May 2013 through June 2013 for the latest TCI.
About the HSBC Trade Forecast - Modeled by Oxford Economics
Oxford Economics has tailored a unique service for HSBC which forecasts bilateral trade for total exports/imports of goods, based on HSBC's own analysis and forecasts of the world economy to generate a full bilateral set of trade flows for total imports and exports of goods. HSBC's Global Trade forecast encompasses trade data for 25 countries and territories key to world trade.
About HSBC Bank USA, N.A.
HSBC Bank USA, National Association, with total assets of $183.9bn as of 31 March 2013 (US GAAP), serves 3 million customers through retail banking and wealth management, commercial banking, private banking, asset management, and global banking and markets segments. It operates more than 250 bank branches throughout the United States. There are over 165 in New York State as well as branches in: California; Connecticut; Delaware; Washington, D.C.; Florida; Maryland; New Jersey; Pennsylvania; Oregon; Virginia; and Washington State. HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA Inc., an indirect, wholly-owned subsidiary of HSBC North America Holdings Inc. HSBC Bank USA, N.A. is a member of the FDIC.
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