India will be the fastest-growing market for US exports in the future, with demand increasingly driven by the country’s emerging middle class, according to a report by HSBC Commercial Banking. Exports to India are set to expand at an average rate of 12% a year between 2016 and 2020, and will grow at a rate close to 10% a year over the period of 2021 to 2030.
The HSBC Global Connections report includes the HSBC Trade Forecast, which examines global trade trends during the next five, 10 and 15 years, also finds that US export growth to Europe is expected to recover to a pace of 6% per year during the period of 2012 to 2020.
The HSBC Trade Forecast, produced in association with Oxford Economics, examines bilateral trade corridors between 23 major trading nations and further reveals:
- India and China will be joined by emerging trading nations including Vietnam, Indonesia, Egypt, Turkey, Mexico and Poland to record significant trade growth in the next three years.
- By 2020, HSBC expects that forward-thinking companies worldwide will have developed multiple trade corridors and partnerships, created effective networked supply chains, and tightened efficiency in their operations as a result.
- Echoing the US findings, India represents the fastest growing import or export partner (or both) between 2013-15 or 2016-2020 for the 23 markets examined globally by HSBC.
- US exports will increasingly find their way to rapidly growing consumer markets in developing economies, as growth prospects for the industrialised nations remain subdued.
- Over the medium term, the value of US goods exports destined for the economies of Asia (excluding Japan) is forecast to rise at an average annual rate of 8% throughout the period 2021-2030.
- Vietnam is expected to record double digit annualised trade growth throughout the forecast period of 2012-30 and is expected to become an increasingly important source of US imports.
In the shorter-term, the companion HSBC Trade Confidence Index (TCI) conducted twice a year for HSBC by TNS, finds US-based importers and exporters are still maintaining a steady confidence about their expected trade volumes during the next six months. Nearly half (48%) of US importers and exporters foresee their trade volumes increasing. And while the outlook has weakened a little compared to six months ago, 65% of US businesses do anticipate the global economy to remain at current levels or grow in the near future.
In total, 86% say their trade business will either grow or hold at current levels over the next six months. According to 40% of those surveyed, any obstacles to growth are likely to be related to costs of shipping, logistics and storage. In another positive trend, US traders also say they have more confidence in the financial health of their business partners.
The top two trading partners for US businesses remain their closest neighbours – 84% of US businesses traded with Canada, and 74% of US businesses traded with Latin America. Greater China rounds out the top three with 73% of US traders doing business in the region. Close to a third (30%) of US importers and exporters think Latin America holds the greatest potential for trade growth in the coming months, while 22% believe China is the most promising region.
The vast majority (91%) of importers and exporters indicated their need for trade finance will likely stay the same or increase in the next six months, and 44% of all businesses surveyed said they would rely on their banks for funding.
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