Demand for infrastructure around the world and improving global economic conditions will propel the growth of U.S. exports, a new business survey reports. U.S. export growth will average close to 6% annually to 2030.
In the short term, U.S. businesses reported increased confidence in their trade prospects, according to the HSBC Global Connections Trade Report. Some 67% of U.S. business leaders surveyed expect export and import volumes to rise in the next six months, up from 48% in the second half of 2012, and 29% cited improved global economic conditions as the main reason for increasing business, the report finds.
The HSBC Trade Confidence Index, an international survey of small and middle market businesses, including about 300 in the U.S., rose from 107 to 114, an all-time high since the index’s inception, and higher than the global index average of 112.
Infrastructure trade is expected to grow at an annual rate of 9% from 2013 to 2030, and account for 54% of total global export goods by then. Infrastructure trade consists of infrastructure goods – the materials needed for infrastructure projects – and investment equipment, the machinery required by businesses to boost production.
“Infrastructure is the bedrock that enables economic activity,” said Steve Bottomley, group general manager and head of Commercial Banking in North America for HSBC. “The investment countries are making in infrastructure is phenomenal and provides a huge opportunity for U.S. businesses looking to grow and develop.”
Industrial machinery and transport equipment will top the list of export growth sectors, accounting for 35% of export growth over the next three years, HSBC found.
Despite a recent slowdown in emerging markets, most U.S. business leaders see Latin America (20%) as the most promising region for export trade growth in the near term, HSBC said, followed by China (13%) and Canada (6%). Canada will remain the most important export market for the U.S. over the next 20 years.
Exports to China Will Double
U.S. exports to China will more than double over the next decades, from 7% today to 18% in 2040, HSBC predicts. U.S. transport exports to China are expected to rise by over 10% to the 2030s, the bank forecasts.
“Rising middle classes across Asia’s rapidly emerging markets will drive significant infrastructure demand in the region. And as China looks to scale the value chain in terms of the goods it manufactures, there is a strong opportunity for developed economies like the U.S. to supply sophisticated investment equipment to the country’s producers,” said Prabhat Vira, head of Global Trade and Receivables Finance in North America for HSBC.
Developed economies will continue to invest in infrastructure products such as metalworking machinery, power generation equipment, office equipment and scientific instruments in order to maintain their own competitive advantage, HSBC points out. For example, U.S. imports of transport equipment and information, communications and technology equipment are set to account for over half the growth in U.S. imports in the long term, the report finds.
Not unexpectedly, more dramatic changes are expected in faster growth economies. By 2020, India will overtake the U.S. to become the lead importer of goods for infrastructure, HSBC reports, as it invests to builds its domestic networks. China will become the top importer of investment equipment, in an effort to boost its manufacturing productivity.