HSBC sees global trade growth and protectionism both muted

LONDON Mon Nov 12, 2012 8:09am IST

Passersby walk inside HSBC headquarters in Hong Kong July 30, 2012. REUTERS/Bobby Yip

Passersby walk inside HSBC headquarters in Hong Kong July 30, 2012.

Credit: Reuters/Bobby Yip

Related Topics

LONDON (Reuters) - World trade will stage a modest recovery in 2013, with businesses more confident than some politicians that slow economic growth will not spawn protectionism, HSBC said on Monday.

The bank said it expected trade to expand about 5 percent next year, picking up to a range of 6-7 percent in 2014-2016, driven by ever-closer commercial links between emerging markets.

The 2013 projection is broadly in line with that of the World Trade Organisation, which expects growth of 4.5 percent, up from just 2.5 percent this year. It scaled back forecasts in September because of widespread economic weakness, especially in Europe.

Lou Jiwei, the head of China's $482 billion sovereign wealth fund, told Reuters in Beijing he was worried about rising protectionism in some Western countries.

But James Emmett, HSBC's global head of trade, took a more sanguine view. "If we look at what we're hearing in the market, and what our clients are saying to us, this is not a topic that's coming up regularly," he told Reuters in an interview.

Canadian Prime Minister Stephen Harper went so far last week as to say protectionism could push the world economy towards a prolonged recession.

In its latest forecast, HSBC said it expected the pattern of global trade to be increasingly influenced by fast-growing Asian countries and by 'South-South' trade between emerging economies.

For example, HSBC, a market leader in trade finance, is projecting Mexico's imports from India will expand by 27 percent a year in 2013-2015. Malaysia's shipments to Brazil could rise 14 percent a year over the same period, it says.

JUICY DISCOUNTS

HSBC is also bullish trade between China and India will continue to grow rapidly, driven by demand from middle-class consumers and facilitated by the use of the yuan, China's currency, which is also known as the renminbi (RMB).

Emmett said HSBC had recently opened its first yuan-denominated letter of credit in India to finance imports from China.

Buyers of Chinese goods in emerging markets in particular would find it increasingly attractive to bypass the dollar and pay directly in yuan, Emmett said.

In return for shedding exchange rate risk, Chinese exporters were willing to offer juicy discounts, he said.

"We're hearing factory-gate price advantages of somewhere between 2 and 10 percent by moving into the RMB," Emmett said.

"The RMB will be an important part of the South-South emerging market trade flow as it will take some of the cost out of dealing with a third currency." (Reporting by Alan Wheatley; Editing by Sophie Hares)

FILED UNDER:

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage