HSBC: Trade growth boost expected from 2014

Malta's trade is forecast to grow 83.80% by 2026 at an annualised rate of 0.69% to 2016, increasing substantially at 5.65% between 2017-2021, according to the latest HSBC Global Connections Trade Forecast.Malta is exposed to the present fluctuations in world trade that result from the general economic climate, firstly because of its role as a hub between major trading routes, and secondly as all its businesses are exposed to international markets in some way: it has no natural resources of its own.

Annualised total trade growth in Malta over the next 15 years will be 3.31%, which is the rate at which companies will need to increase their international activities if they are to keep pace with this change.

International trade growth will accelerate from 2014 as the global economy ends a period of growth contraction, according to HSBC's Global Connections Trade Forecast.

It finds international businesses will recover more rapidly and increase their trade activity earlier than previously expected.  This results in predicted trade growth of 86% from 2012 to 2026, taking total trade activity in 2026 to $53.8 trillion compared to a predicted $28.9 trillion for 2012. 

The acceleration in trade growth is driven by two key trends: 'Trade Fuelling Trade' and 'Corridor Creators'. In 'Trade Fuelling Trade' the report predicts the rapid growth of sectors that support world trade. Eight of the top 10 emerging fast growth sectors fall in to this category, including 'Containers and Packaging' (9.02% predicted annual growth) reflecting a greater transportation of goods around the world and 'Binding Products for Foundries' (8.85% predicted annual growth) which tracks trade of the moulds used to create iron/steel infrastructure products required by the increasing number of railway, road and building infrastructure projects, which then directly facilitate further international trade.

Demonstrating this trend, Thailand is seeing predicted annualised growth to 2016 of tugboat exports (22.05%) and export of railway service vehicles (20.36%) to countries within the Asia Pacific region, which will in turn support the development of their trade infrastructures.

'Corridor Creators' are businesses searching out the best trade partners to drive competitive advantage, regardless of location, defining their own trade routes and corridors.  For example, Indian businesses are opening up trade in pharmaceuticals with Africa and emerging Asia, creating new corridors in the Southern Silk route (exports of medicines from India to Ghana and Indonesia are predicted to grow annually to 2016 by 11.85% and 8.84% respectively).

These innovative businesses are the ones to watch as they help to redefine how individual nations and regions are defined. This is evidenced by the growing trade relationship between Germany and Latin America within the automotive sector. Germany is utilising existing relationships with Mexico to forge new links within Argentina.

Alan Keir, Group Managing Director and Global Head, HSBC Commercial Banking, said: "The international business world isn't prepared to sit back and wait for the outcome of ongoing conversations about economic recovery.  Where once businesses followed economic investment, now, forward-thinking companies are leading the way.

"Whether taking advantage of shorter-term growth in international trade, which despite economic uncertainty sits at $1trillion a year, or by creating new supply chains that open up trade corridors, businesses are connecting themselves to future opportunities."