LONDON 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.
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)