Despite the ongoing difficulties in the global economy, notably in the euro area, HSBC’s global connections report forecasts world trade is set to grow at a robust rate of 4.7 per cent annually over the next 15 years, giving a total rise in trade over that period of 98 per cent.

Canada is the only western nation among the top 10 most confident

This figure has been indexed to January 2011, and remains relatively flat from the previously forecasted figure of 99 per cent growth indexed to January 2011. However, the recent deterioration in economic and financial conditions would, if sustained, dampen this forecast as it was based on parameter data that was collected up to the middle of April.

Even this forecast reflects the current uncertainty to a degree, with the near term projection over the next five years showing the weakest growth, at 3.7 per cent, before an acceleration to 5.9 per cent in the five years to 2021. What the forecast does show is that the underlying forces driving global trade forward remain very much intact, led by emerging market countries.

Those countries continue to outpace the developed world in terms of speed of trade growth, with Poland, India and the Czech Republic expected to show export growth of around 5.5 per cent while Brazil and India are forecast to see import growth of over seven per cent.

Developed nations continue to grow in places, and clearly still represent the largest share of global trade by volume, but are showing much slower overall growth, with Europe particularly weak. Partly as a result, the forecast predicts some rebalancing of global trade, with the rate of growth of US exports expected to be faster than that of its imports while in Germany, China, Brazil and India, the rate of growth of imports exceed that of their exports.

The emerging markets countries are forecast to see the biggest gains in trade, with Latin America up by six per cent and Asia by 5.4 per cent to 2016. China, despite its increasing size, is still forecast to see strong growth in both imports and exports of 5.1 per cent and 4.7 per cent to 2016. India sees the fastest growth in exports of 5.4 per cent and with imports to grow 7.2 per cent. Poland and the Czech Republic are the two other fastest growing exporters, while Brazil and Saudi Arabia are first and third for import growth.

The weakest trade growth is expected in Europe at just 2.1 per cent. France, the UK and Italy are all expected to see trade growth of 2.5 per cent or less. Spain sees very weak growth in imports of just 1.3 per cent, but exports should grow by 3.3 per cent. A similar rebalancing is expected in the US with exports growth of 3.5 per cent and imports of just 1.6 per cent. Japan broadly holds its own with exports to grow 2.9 per cent and imports by 2.7 per cent.

Although the forecast is more optimistic than four months ago, the recent rapid deterioration in economic conditions and markets, highlighted by the recent poor PMI surveys, suggests we have to treat the improvement in the forecast with some caution. That is particularly the case now the weakness in the data appears to be reaching places like India, China and Australia. The forecast is most vulnerable in the near term and there would be scope for the 3.7 per cent forecast over the first five years to be revised lower should the turmoil continue.

Nevertheless, there are some trends which will likely continue. First and foremost, the rebalancing of global trade with the big surplus and emerging market nations seeing faster import growth. Emerging market nations are also becoming more dominant in global trade, with China forecast to be the dominant trade nation by 2026. Equally the trade corridors between those nations are growing in strength, most notably in Asia, but also between southeast Asia, India and Latin America.

The Trade Confidence Index, a study of current sentiment among 5,800 international businesses, suggests the short-term outlook for the global economy is positive. Almost three-quarters of respondents believe it will remain stable or grow in the next six months, with an index score of 113, above the neutral score of 100.

Echoing the trade forecast, the index finds that emerging markets remain considerably more confident about international trading prospects than their developed counterparts. Canada is the only western nation in the top 10 most confident nations, which features countries from Latin America, the Middle East and Asia. Turkey has grown in confidence most significantly over the last six months (up 13 points) and now stands alongside India as one of the most confident countries studied. Indonesian and Saudi Arabian respondents are most assured overall.

Confidence among business leaders extends to the volume of trade expected to occur. Half of respondents expect volumes to grow in the next six months while 37 per cent anticipate they will remain stable. This is slightly more positive than in the second half of last year. While the risk of buyer payment default is a concern, two-thirds of those surveyed think that this risk is unlikely to get any worse before year end.

The US, Germany, China and France are the top four trading nations globally and are expected to remain that way over the forecast period, although Japan is projected to overtake France on exports to become fourth in the world by 2016. China becomes the dominant trade nation by some distance by the end of the forecast period, as its strong growth trajectory will result in it overtaking the US as the world’s second largest importer after Germany, and strengthening its position as the world’s largest exporter by 2026.

India is also forecast to make considerable progress rising to be the 10th largest importer and 12th largest exporter. Russia also becomes a large import destination rising to be the ninth largest in the world. Spain shows one of the largest downward moves as it goes from the 11th to 14th largest importer, but it remains the 13th largest exporter.

Brazil and India are forecast to see the fastest import growth globally over the next five years at 7.7 per cent and 7.2 per cent respectively. They are followed by Saudi Arabia at 6.4 per cent, with Indonesia and the United Arab Emirates both better than 5.5 per cent. Indonesia is also expected to see the 10th fastest growth in exports. Poland and the Czech Republic are expected to see the first and third fastest growth in exports at 5.6 per cent and 5.4 per cent and Poland is also the sixth fastest growing importer with a similar growth rate.

Malaysia also shows up in the top 10 growing markets for both imports and exports, while Singapore is the fourth fastest growing exporter and just makes the top 15 for import growth.

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