Infrastructure spending surges to boost world trade

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VANCOUVER, Oct. 8, 2013 /CNW/ - Infrastructure trade is set to triple by 2030, according to HSBC's latest Trade Forecast, and see a significant rise in its share of global trade. The Forecast outlines how as countries look to increase their manufacturing capacity and civil infrastructure, demand for overseas goods and equipment will surge.

In a special focus on infrastructure, the report finds that between 2013 and 2030 infrastructure-related trade will grow at an average of 9% annually, and see a rise in its share of overall merchandise trade, from 45% of total goods exports in 2013 to 54% by 2030. In Canada, the share of infrastructure-related goods - such as transport equipment, industrial machinery and non-ferrous metals - is expected to increase from 22% to 32% by 2030.

International businesses around the world report the same level of confidence in global trade prospects as last year with the HSBC Trade Confidence Index holding steady at 112 points. The Forecast meanwhile predicts that world trade will grow at a modest pace to 2015 before then accelerating between 2016 and 2020. Canada's current Trade Confidence Index is tracking at the same pace as the global average, at 111.

Shifting Infrastructure Demand
The report differentiates between goods for infrastructure - the materials needed for infrastructure projects, and investment equipment - the machinery required by businesses to boost production.¹ The USA is currently the biggest importer of infrastructure-related goods across these sub-sectors, but the report predicts that by 2020 India will become the lead importer of goods for infrastructure as it invests in building its domestic networks. China is set to become the top importer of investment equipment by 2020 as it boosts manufacturing capacity.

Other rapidly-growing Asian economies will take an increasing share of infrastructure-related imports over time, with Malaysia, Korea and Vietnam moving up the rankings.  Excluding the USA, Mexico is the highest ranking non-Asian importer of total infrastructure goods, ahead of Brazil.

Overall the report indicates that trade in investment equipment will increase more rapidly than trade in goods for infrastructure in the years to 2030, in part due to the pivot in China's economic focus towards consumer-led growth and next generation technology.

Ben Arber, Head of Global Trade and Receivables Finance, HSBC Bank Canada said: "The investment that many countries are making in infrastructure is significant, and this provides a huge opportunity for businesses looking to grow and develop.  Canada is well positioned both in terms of the abundance of natural resources and companies with extraction, engineering and project management expertise. There continues to be will be strong demand for infrastructure-related goods and natural resources from the USA, and continually growing demand for the same from China and other emerging markets."

Maximising the Infrastructure Opportunity
China is forecast to increase its dominance of global exports for infrastructure, increasing its share of total global exports of these goods (among the 25 countries in this Forecast) to 34% of goods for infrastructure and 39% of investment equipment by 2030. Canada's strong export growth will allow it to move from 10^th to 9^th in the ranking of countries by 'intermediate goods for infrastructure' trade over the long term, while also moving from 12^th to 10^th in the ranking of countries for 'investment equipment' trade, also over the long term.

Overall Infrastructure Investment
According to the report, even as economies develop and become wealthier, their demand for infrastructure products remains strong.  It outlines how advanced economies like the USA, the UK and Germany will need to continue investing in infrastructure to maintain their competitive advantage in supplying investment goods to the rest of the world.

Ben Arber commented: "We expect infrastructure-related goods to increase their share of rising global trade, providing strong opportunities across both developed and emerging economies for exporters and importers of those goods and the merchandise that can be manufactured as a result. This is all good news for Canadian international companies, who could now also benefit from $1 billion set aside by HSBC Bank Canada earlier this year to help fund new international growth projects."

Asia is forecast to see the most rapid growth in merchandise trade in the decade to 2030 led by India, China and Vietnam at an average of more than 10% a year.  Yet advanced European economies - such as the UK, France and Germany - are also forecast to expand their exports of goods at rates of 4-5% a year on average over this period, while average growth in US goods exports will be closer to 6%.

To find out more about the trade opportunities for your business please visit https://globalconnections.hsbc.com/global/en/tools-data to explore our interactive Trade Forecast Tool to explore current and future insights into world trade dynamics. Explore top trade routes, toggle between imports and exports, and compare trade activity between countries.

Supporting Tables

Largest importers of infrastructure related goods (by type) forecast in 2013 and by 2030:

Goods for Infrastructure		Investment Equipment
2013	2030	2013	2030
1. USA	1. India	1.USA	1. China
2. India	2. USA	2. China	2. USA
3. Hong Kong	3. China	3. Hong Kong	3. Hong Kong
4. China	4. Hong Kong	4. Germany	4. India
5. Germany	5. Korea	5. Mexico	5. Malaysia

Largest exporters of infrastructure related goods (by type) forecast in 2013 and by 2030:

Goods for Infrastructure		Investment Equipment
2013	2030	2013	2030
1. China	1. China	1. China	1. China
2. UAE	2. UAE	2. USA	2. USA
3. USA	3. India	3. Japan	3. Korea
4. Germany	4. USA	4. Germany	4. Japan
5. Korea	5. Korea	5. Hong Kong	5. Hong Kong

For a copy of the Global Connections Trade Forecast report and for further information, log onto http://www.globalconnections.hsbc.com/.  An infographic which portrays key findings from the latest trade forecast is also available upon request.

HSBC's Trade forecast encompasses trade data for 25 countries and territories key to world trade.

¹To equip for growth countries around the world need:

• Goods for infrastructure e.g. metals, minerals, buildings and transport equipment
• Investment equipment e.g. specialised machinery, machinery for power generation, metal working machinery, office equipment, electrics and professional/scientific instruments

2 Oxford Economics produces a global report for HSBC, plus regional reports and country specific reports on the following 25 countries and territories: Hong Kong, China, Australia, Indonesia, Malaysia, India, Singapore, Vietnam, Bangladesh, Canada, USA, Brazil, Mexico, Argentina, UK, France, Turkey, Germany, Poland, Ireland, UAE, Saudi Arabia, Korea, Japan and Egypt.

For updates from the HSBC Press Office, follow us on Twitter: www.twitter.com/HSBC_Press.

Notes to Editors:

1)     About the HSBC Trade Forecast - Modeled by Oxford Economics
Oxford Economics has tailored a unique service for HSBC which forecasts bilateral trade for total exports/imports of goods, based on HSBC's own analysis and forecasts of the world economy to generate a full bilateral set of trade flows for total imports and exports of goods, and balances between 180 pairs of countries.

2)     Oxford Economics employs a global modeling framework that ensures full consistency between all economies, in part driven by trade linkages. The forecasts take into account factors such as the rate of demand growth in the destination market and the exporter's competitiveness. Exports, imports and trade balances are identified, with both historical estimates and forecasts for the periods 2013-15, 2016-20 and 2021-30. The model looks at two-digit classifications from the COMTRADE database, grouped in to 30 sector headings. More information about the sector modeling can be found on http://www.globalconnections.hsbc.com/

3)     HSBC Trade Confidence Index
The HSBC Trade Confidence Index covers a total of 20 markets and is the largest trade confidence survey globally. The current survey comprises six-month views of 5,800 exporters, importers and traders from small and mid-market enterprises on: trade volume; buyer and supplier risks; the need for trade finance; access to trade finance; and the impact of foreign exchange on their businesses.

4)     About HSBC Bank Canada
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, is the leading international bank in Canada. With around 6,600 offices in 80 countries and territories and assets of US$2,645 billion at 30 June 2013, the HSBC Group is one of the world's largest banking and financial services organizations.

5)     HSBC Commercial Banking
For nearly 150 years we have been where the growth is, connecting customers to opportunities. Today, HSBC Commercial Banking serves businesses ranging from small enterprises to large multinationals in over 60 developed and faster-growing markets around the world. Whether it is working capital, trade finance or payments and cash management solutions, we provide the tools and expertise that businesses need to thrive. With a network covering three quarters of global commerce, we make HSBC the world's leading international trade and business bank. For more information see www.hsbc.com/1/2/business-and-commercial 

SOURCE: HSBC Bank Canada

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