US Firms Believe Access to Trade Finance Improving, Finds HSBC Survey

Although the outlook on the global economy has tempered over the past six months,
US small to mid-sized enterprises (SMEs) remain optimistic about global trade growth. The latest HSBC Trade Confidence Index found that more than half (56%) of US respondents anticipate higher trade volumes in the next six months – only slightly less than the 58% of US businesses that were optimistic about trade growth in the first half of 2010.

The HSBC Trade Confidence Index found that US businesses were less optimistic about the global economy, with only 46% expecting economic growth over the next six months, compared to 60% in the first half of 2010.

“Considering some respondents’ concerns about the domestic economy, the positive sentiment among US businesses about global trade prospects is encouraging and indicates that trade remains one of the key drivers of economic growth globally,” said William Nowicki, executive vice president (EVP) 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 US businesses. Echoing intra-regional trade trends globally, trade between the US 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, US 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 US businesses increasingly believe access to trade finance is improving. In fact, 25 % of the respondents expect access to trade finance will increase slightly in the next six months; in the second half of 2009, only 16% made such a prediction. This indicates that companies believe that credit markets are continuing to open up as the economy stabilises and improves.

Another significant finding is that emerging markets continue to present an enormous opportunity for US exporters and importers as they lead the global economic recovery. In fact, the HSBC Trade Confidence Index revealed that:

  • US companies are gaining enthusiasm for trade with Latin America, which the respondents listed as the most promising region for trade growth in the next six months, followed by Greater China and Canada.
  • Among the nations surveyed in the HSBC Index, Canada, China, Hong Kong, India and Mexico all included the US among the top three most promising regions for trade growth in the next six months.
  • The number of US businesses that believe trade volumes will remain the same has decreased. In fact, compared to their outlook in the second half of 2009, more businesses are predicting that trade volumes will increase, though slightly.

“Global trade is a key barometer and driver of economic growth,” added 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 US and Canada continues to build. More than eight out of ten (86%) of US 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% 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 US businesses, they should seek out insight from companies with a global footprint and deep experience on both sides of trade transactions,” said Nowicki.


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