Singapore’s trade to grow faster than world average over next 15 years: HSBC

Singapore’s companies to increase trade activity by 5.00% annually.

Singapore’s geographical location is set to enhance its own role as a trade gateway to Asia Pacific as global trade growth accelerates from 2014, according to the HSBC Global Connections trade forecast.
Singapore’s trade, it says will grow faster than the world average over the next 15 years as its role as a core trade hub between Europe, North America and the Asia Pacific region strengthens over the period.

Here’s more from HSBC.

Supported by an earlier resumption of economic growth within the emerging markets, HSBC has revised its forecast and expects global trade to accelerate from 2014 rather than 2015. Influenced by shifting trade activities, Singapore's trade growth is expected to outpace the global average between 2012 and 2026 with an annualised growth rate of 5.00% – which is the rate at which companies will need to increase their international activities if they are to keep pace with this change – compared to the world average of 4.70%. Over the next 15 years, Singapore’s trade is expected to grow 137.33% to 2026.

Willie Tham, Managing Director and Head of Commercial Banking, HSBC Singapore, said: “The Trade Forecast allows businesses to understand the opportunities across sectors and countries, and critically, to plan their own strategies accordingly. Our research provides clear optimism for the region’s trade prospects in a somewhat challenging environment. With its geographical advantage, Singapore is poised to cement its status as an international trade hub as global trade growth accelerates. This creates opportunities, and a need for businesses in Singapore to define their international strategy in order to ride on the region’s next wave of positive trade momentum, which we forecast to begin in 2014.”

Trading corridors

Export
Singapore’s largest export partners are Indonesia, China and Malaysia, with exports to each of these predicted to grow annually to 2016 by 3.78%, 6.01% and 3.65%, respectively. The fastest growing large export partners are mainly in the Asia Pacific region with exports to India forecast to grow by 8.27% (annualised to 2016) because of an increase in non-crude oil exports. South Korea is set to grow as an export destination by 8.13% annually to 2016 and Vietnam and Hong Kong are also forecast to increase as growth export corridors by 7.41% and 6.60%, respectively. These emerging export partners reflect both the increased role that Singapore has in the transport of oil around the world, and in fast growing established supply chains.

Import
Singapore’s largest import partners are China, the USA and Malaysia. Imports from these countries are forecast to grow at annualised rates of 5.74%, 6.16% and 3.88%, respectively, to 2016. With the notable exception of South Korea, Singapore’s fastest growing large import partners are from Europe. Imports from the Netherlands are forecast to increase, accounted for by an 11.98% increase in non-crude oil imports annually to 2016. France’s imports of aircraft, spacecraft and satellites will increase at an annualised rate of 13.21%, driving an overall increase in this corridor of 7.44%.

An increase in imports from the USA is forecast to be driven by annual growth over the next five years in non-crude oil (12.01%), turbo-jets (6.66%) and machine parts (6.16%). Aircraft parts and medicine feature strongly as large fast growing exports with forecast growth of 10.25% and 7.59% annually to 2016. These are sectors in which the Netherlands, France, the UK and the USA dominate the global supply chain and this suggests that Singapore is being used as a route for businesses from these countries to access markets in the Asia Pacific.

Sector opportunities

Consumer electronics
Singapore has a key role in the consumer electronics sector, but is primarily an importer and exporter of these goods between global regions. Electronic integrated circuits and printing and ancillary machinery are Singapore’s second and third largest export sectors and are forecast to grow at 3.45% and 10.05% annually over the next five years, respectively. Exports to the USA in printing and ancillary machinery are forecast to increase by 11.51% annually to 2016, while imports from China are forecast to increase by 10.38%.

In electronic integrated circuits, exports to the Philippines are forecast to grow at 4.83% annually to 2016, to Thailand annually at 4.73% and to South Korea annually by 3.12%. Imports of electronic integrated circuits from Thailand are forecast to increase by 7.76% annually over the next five years. These are core import and export sectors for Singapore and international businesses seeking to expand in these markets need to use Singapore as a base for entering the Asia-Pacific region from North America or Europe or for entering North America and Europe from the Asia-Pacific region. Rates of growth are fast; businesses need to increase their international activity by 10.05% if they are to keep pace with the globalisation in this sector.

Oil
Non-crude oil is Singapore’s largest export sector and is forecast to grow annually by 6.26% to 2016. Imports of non-crude oil are also forecast to grow at 8.34% annually over the same period. Looking at the emerging trade corridors by sector, it is clear how substantial this sector is for the country and how it acts as a key supply route connecting the Asia Pacific region with Latin America, North America and Europe. Exports to India in non-crude oil are set to increase at an annualised rate of 10.18% over the next five years, while exports to the Philippines will grow by 6.87% and to China by 4.86% annually to 2016. Imports from Venezuela are set to increase by 15.32%, from Japan by 14.36%, from Russia by 13.56% and from the USA by 12.01% - all annualised to 2016.

Comparatively, other sectors are dwarfed by this trade. Businesses in the sector will be well aware both of its complexity and its global nature. Using Singapore as a hub provides a route to global markets. But rapid growth, forecast at 6.26% annually for exports, places pressure on these businesses to work through the global supply chain to increase their international activity at least that rate.

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