Asia will be key engine of growth in world trade

Asia trade volumes will almost double by 2025, according to HSBC’s world trade forecaster.

HSBC’s new quarterly world trade forecaster, HSBC Trade Connections, says that Asia trade will be the key driver of world trade growth by 2025. It is expected that Asia trade volumes will increase by 96% to almost $14 trillion in the period compared to just 73% for total world trade. The forecaster also predicted year-on-year Asia trade growth of 4.8% compared to 3.8% global trade growth up to 2025.

“International trade is set to increase despite current economic uncertainty; for businesses that are looking to grow, international trade is the real opportunity,” said Noel Quinn, regional head of commercial banking for Asia-Pacific at HSBC. “Whilst traders recorded a dip in confidence levels for the next six months, companies must prepare themselves now for the expanding trade markets across the world and especially within the Asia-Pacific region. There are undoubtedly short-term risks for businesses given the challenging economic conditions but some mitigation is possible if companies start preparing now to capitalise on the growth in global trade.”

According to the forecaster, Asia-Pacific will continue to be an important core trading route between mainland China, Hong Kong, Japan, Korea and the US while at the same time becoming increasingly important to Brazil, India, Malaysia and Vietnam. Core trading sectors for exports are revealed as mainly foodstuffs such as fish, milk, rice and shellfish and agricultural commodities such as palm oil and rubber. On the other hand, core trading sectors for imports are also foodstuffs such as maize, meats and soya and agricultural commodities.

China is predicted to be Asia’s largest trade partner by value in 2025 almost doubling its trade value from $1.1 trillion in 2010 to more than $2 trillion. The mainland is also predicted to command around 13% of world trade by 2025, driven by commodities trading and an increase in manufacturing and will overtake the US as the largest trading nation in terms of total US dollar value.

The forecaster concluded that mainland China, India, Indonesia and Vietnam are among the six main international powerhouses that will drive world trade growth along with Brazil and Egypt and that a redistribution of global supply chains between developed and emerging economies will reshape trading patterns.

“As the centre of international business shifts from developed to emerging markets, companies wishing to take advantage of the opportunities international markets offer must have the right strategic partners in place to be successful,” said Quinn.

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