A tipping point in the balance of global trading power is imminent, which will see imports grow faster than exports in the emerging markets within the next five years, according to HSBC Commercial Banking.
The group’s latest ‘Global Connections’ report says that the trend signifies a shift, where traditionally export-driven countries are now starting to see imports rise, which is acting as a driver for both developed and emerging market growth.
According to the ‘Global Connections’ trade forecast, in China, India and Brazil the rate of growth in imports will exceed that of exports between now and 2017; a trend that will continue until 2026. This will contrast with the US, the UK, France and Spain, which are expected to see export growth exceed the rate of imports over the next 15 years.
The report also predicts that some of the fastest-growing importers by 2016 will be Brazil, India and Indonesia. Longer term, Germany and China are forecast to overtake the US to become the world’s largest importers by 2026 while India, currently in 15th position, will move up to 10th place over the same period.
HSBC suggests that businesses’ short-term outlook for the global economy is positive, especially in the emerging markets. Its study of business sentiment, the trade confidence index, shows that 71% of respondents believe that the global economy will either remain stable or grow over the next six months. A key driver of this outlook is the confidence of traders in the emerging markets, with only one country from the developed markets appearing in the top 10 most confident countries.
The report notes that already in Asia-Pacific, 10 of the top 15 global trading partners are countries from within the same region; a trend expected to strengthen. Nine of China’s 15 largest import partners, as well as six of its fastest-growing partners to 2016, come from the same region. In addition, the top six fastest-growing export destinations for India to 2016 are either in Asia or the Middle East.
The report also reviews Latin America which, it notes, is looking outside its own partners and turning towards Asia for its trading needs, with nine of its top 15 trading partners falling from outside the region. Latin America’s top five fastest-growing import partners to 2016 are India, China, Thailand, Indonesia and Singapore. Six of the top 10 fastest-growing export destinations for Brazil to 2016 are either Asian or Middle Eastern countries.
“Many of the fastest growing markets around the world have clearly-established themselves as a long-term driving force behind global trade,” said Alan Keir, HSBC group managing director and global head of commercial banking. “They have a key role in world growth and their demand will lead the way.”
The country is expected to survive the review, which it must do to retain its place in the European Central Bank’s asset purchase programme.
The bank believes that the battered UK currency, recently only just holding above the US$1.20 level, could be trading at US$1.36 by this time next year.
The Middle East oil producer’s debut global bond issue surpassed the total of US$16.5bn raised by Argentina when it tapped the market earlier this year.
The group reports that currency fluctuations were less of a challenge to multinationals in the second quarter of 2016, but Brexit has since spelt a return to volatility.