Econintersect: U.S. business leaders expect trade to rise in the next six months as global economic conditions improve and demand for infrastructure goods soars, according to a U.S. HSBC Global Connections Trade Report. Econintersect is also seeing global activity increasing, and was one of the reasons for an improved October economic forecast.
U.S. businesses reported increased confidence in near term trade prospects, pushing the HSBC Trade Confidence Index from 107 to 114, an all-time high since the index’s inception, and higher than the global index average of 112. The index is an international survey of small and middle market businesses, including about 300 in the U.S., engaged in cross-border trade. Additionally, 67 percent of U.S. business leaders surveyed expect export and import volumes to rise in the next six months, up from 48 percent in the second half of 2012, and 29 percent cited improved global economic conditions as the main reason for increasing business, the report finds.
According to the report, which includes short-, mid-, and long-term trade outlooks, industrial machinery and transport equipment are expected to be the top U.S. export growth sectors, accounting for 35 percent of the growth in exports over the next three years. Globally, infrastructure trade is set to triple by 2030, growing at an average annual rate of nine percent from 2013 to 2030, and accounting for 54 percent of total global exports goods by 2030, up from 45 percent in 2013. Infrastructure trade includes infrastructure goods – the materials needed for infrastructure projects, and investment equipment – the machinery required by businesses to boost production. Steve Bottomley, Group General Manager and Head of Commercial Banking in North America for HSBC stated:
Infrastructure is the bedrock that enables economic activity,The investment countries are making in infrastructure is phenomenal and provides a huge opportunity for U.S. businesses looking to grow and develop. By connecting businesses to international opportunities and markets, HSBC is helping U.S. companies capitalize on this trend as well as spur economic growth.
And despite a recent slowdown in emerging markets, most U.S. business leaders see Latin America (20 percent) as the most promising region for export trade growth in the near term, followed by China (13 percent) and Canada (six percent), the HSBC report shows. Prabhat Vira, Regional Head of Global Trade and Receivables Finance in North America for HSBC added:
The U.S. has good access to a wide range of export markets because of its geographical position, openness to trade and competitiveness, especially in transport equipment and industrial machinery. Rising middle classes across Asia’s rapidly emerging markets will drive significant infrastructure demand in the region. And as China looks to scale the value chain in terms of the goods it manufactures, there is a strong opportunity for developed economies like the U.S. to supply sophisticated investment equipment to the country’s producers.
Transport equipment helping power U.S. export growth to China
The HSBC Trade Forecast shows that U.S. transport exports to China are expected to rise by over 10 percent to the 2030s. Other export findings include:
- U.S. exports to China will more than double over the next decades, from seven percent today to 18 percent in 2040;
- Canada is and will remain the most important export market for the U.S. in the next two decades;
- Average growth in U.S. exports will be close to six percent annually to 2030
Need to renew or replace capital stock fueling U.S. import growth
Demand for infrastructure products in developed markets remains strong because economies like the U.S. must renew and replace existing capital stock to maintain their own competitive advantage in supplying investment goods to the rest of the world, the report shows. In fact, U.S. imports of transport equipment and information, communications and technology equipment are set to account for over half the growth in U.S. imports in the long term, the report finds. Other import findings include:
By 2020, India will overtake the U.S. to become the lead importer of goods for infrastructure, as it invests to builds its domestic networks, and China will outpace the U.S. to become the top importer of investment equipment, as it invests to boost its manufacturing productivity.
full report: http://www.globalconnections.hsbc.com/
