A shift towards the production of higher-value goods around the world, presenting opportunities for forward thinking companies looking to expand, according to the latest
‘Commercial Banking Trade Forecast’
issued by HSBC. The report was produced for the banking group by Oxford Economics.
According to the report, rapid industrialisation and increasing wages, coupled with maturing consumer demand in many of the countries along the South-South corridor are driving different types of global trade growth and the HSBC/Oxford Economics forecast highlights how these trends are changing the types of goods imported, manufactured and subsequently exported.
As countries shift towards higher value sectors there are significant opportunities for companies to evolve and grow. The forecast reports for countries such as Vietnam and Bangladesh show a shift from basic commodities trading in sectors such as cereals or sugar, to become a refiner or producer of branded goods based on those raw materials. In many of the developed markets there is a shift towards increasingly specialised sectors such as chemicals and pharmaceutical products as companies seek opportunities for higher returns.
This shift towards the production of higher value goods is particularly evident in Asia, with a clear pattern emerging as Chinese export growth in information and communications technology and industrial machinery gathers pace. This balances a declining rate of growth in sectors such as textiles, giving rise to opportunities for companies in the smaller, faster growing countries around the region to win contracts to produce these more basic goods.
“Emerging markets are developing at a phenomenal pace and are set to reshape world trade patterns over the next 20 years,” said James Emmett, HSBC’s global head of trade and receivables finance. “By expanding their operations in to new, higher value sectors, they are driving more developed nations to specialise and diversify to compete. Understanding which sectors are growing in which markets, delivers huge opportunities for businesses as they plan for the future and aim to capitalise on these trends.”
The forecast finds that Malaysia and Argentina are making the most significant progress in moving up the supply chain. Malaysia’s top exportable goods will shift from lower-value sectors such as animals and vegetable oils to higher-end industrial machinery, which will make the largest contribution to Malaysia’s export growth by 2030. Argentina’s top export sectors will change from animal products to transport equipment and industrial machinery.
Developed nations, including the USA and UK, are also expected to evolve the goods they export. Both countries will continue to trade in industrial machinery, but increasingly at the higher-end of the sector. Export growth in the UK is increasingly being driven by high-technology manufactured goods, as low-cost producers in the emerging markets satisfy an increasing share of demand for less sophisticated products. In the US, growth is driven by three high value-added sectors – industrial machinery, transport equipment and scientific apparatus – which will contribute to half of the increase of exports over the decade 2021-2031.
Industrial machinery, ranging from large power generating machinery to small parts for domestic electrical items, will extend its dominance as the world’s top export sector. It will encompass around 25% of goods exported among the top 25 trading nations by 2030, and contribute over a third of the growth in total merchandise exports from 2013 according to the forecast.
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