VANCOUVER, May 28 ,2015 /CNW/ - According to the latest HSBC
Trade Forecast, Canada's historic
trade ties with the US and a growing presence in emerging markets,
together with past trade agreements, will serve to boost trade
flows in the longer term. At the same time, amid a low dollar
environment and a plunge in world oil prices, greater
diversification of Canada's
economy towards exports and business investment will mitigate the
impact of sluggish energy export growth, should companies make the
most of that opportunity.
Tepid growth in world oil demand and a need to rebalance global
supply will lead to subdued Canadian oil prospects and impede
growth into the long-term - accordingly, we forecast real GDP
growth in Canada to average 2.1
per cent over the medium term (from 2021 to 2030).
From an average of 1.5 per cent annual growth between 2012 and
2014, world merchandise trade should increase by about 8 per cent a
year from 2017, according to the report. Trade agreements still in
negotiation have the potential to further underpin growth in trade
flows in the years ahead.
For example, the proposed Trans-Pacific Partnership (TPP), a
trade deal with South Korea, and
potential bilateral trade accords under negotiation with other
countries all have the potential to underpin export growth, as they
expand access to, and liberalize trade with, fast-growing economies
in Asia. The TPP and Transatlantic
Trade and Investment Partnership (TTIP) agreements also have the
potential to bring down trade barriers and expand Canada's reach in existing markets.
Andrew Skinner, Head of Global
Trade and Receivables Finance at HSBC Bank Canada, said: "With
faster growth in developed economies and a recovery in emerging
markets on the horizon, Canadian trade growth looks set to
accelerate back to pre-financial crisis levels. But we shouldn't
limit ourselves to returning to status quo levels – uncovering
opportunities for new product development and trade partners, in
fields like electronics, pharmaceuticals and hi-tech, would provide
meaningful support to Canada's
long-term economic health beyond traditional industries and trade
routes."
Import/Export corridors to watch
At the sector level,
the mix of goods imports is not expected to change much in the
coming years. Industrial machinery will remain the most important
import sector, and is expected to contribute more than 20% to total
import growth over 2015-30. Further, we expect Canada to import less petroleum products over
the forecast period, and that this sector will be less important
for imports as domestic supplies and increased refinement ability
curb the need to import energy.
With energy accounting for about a quarter of total export
growth from 2015 to 2030, low oil prices and expectations of only a
subdued rebound will weigh on exports in the coming years. However,
a weaker Canadian dollar and lower oil prices will support
non-energy export growth in the years ahead. Machinery and
transportation exports are also expected to grow in importance in
export flows, particularly as US demand rises, although the
automotive sector faces some competitiveness issues.
Downside risks to the outlook include delays to the negotiation
and implementation of trade liberalisation agreements and the
continued shortening of global supply chains (the trend to
re-shore production and so reduce cross-border traffic in
intermediate manufactured goods).
Electrifying trade
This HSBC Trade Forecast places a special focus on plans for the
electronics industry.
Canada's electronics industry
is diversifying away from a narrow focus on communications
equipment, a trend we expect to continue in coming years,
underpinning electronics exports growth. Indeed, there has been a
surge in patent applications in Canada's information and communications
technology (ICT) industries according to the World Economic Forum.
From a geographic perspective, Canada is expected to benefit from strong
demand in emerging markets as these economies develop and their
demand for electronic goods increases.
We also expect electronics imports to rise in the long-term, driven
by Canada's knowledge-based
economy, its highly-skilled workforce, and rising household
spending and business investment as the economic mix becomes more
diversified. In fact, electronics exports are forecast to grow
about 4% per annum on average over the period 2015-30, but this
will be outpaced by growth in imports of electronics averaging more
than 6% a year as domestic demand remains firm. As a result, there
will be a widening trade deficit in electronics goods.
Through Canada's membership in the
WTO's Information Technology Agreement (ITA), tariffs on most of
the electronics products covered by the agreement have been
removed. An expansion of the agreement to cover an additional 200
products is expected to gradually reduce the average rate of duty
on these goods applied in Canada
from the current level of 6% to zero-tariff and duty-free
guarantees.
Finally, research cited by the Information Technology and
Innovation Foundation shows that sectors of the economy that
adopted ICT have seen a rise in labour productivity. The report
expects that businesses will increasingly adopt ICT where possible,
contributing positively to long-term growth prospects.
For updates from the HSBC Press Office, follow us on Twitter:
www.twitter.com/HSBC_Press.
For a copy of the Global Connections Trade Forecast report and
for further information, please visit
www.globalconnections.hsbc.com.
Notes to Editors:
About the HSBC Trade Forecast -
Modelled by Oxford Economics
Oxford Economics has tailored
a unique service for HSBC which forecasts bilateral trade for total
exports/imports of goods, based on HSBC's own analysis and
forecasts of the world economy, to generate a full bilateral set of
trade flows for total imports/exports of goods and balances between
180 pairs of countries.
Oxford Economics employs a global modelling framework that
ensures full consistency between all economies, in part driven by
trade linkages. The forecasts take into account factors such as the
rate of demand growth in the destination market and the exporter's
competitiveness. Exports, imports and trade balances are
identified, with both historical estimates and forecasts for the
periods 2014-16, 2017-20 and 2021-30. Sectors are classified
according to the UN's Standard International Trade Classifications
(SITC) and grouped into 30 sector headings. More information about
the sector modeling can be found on
http://www.globalconnections.hsbc.com/
About HSBC Commercial Banking
For nearly 150 years we
have been where the growth is, connecting customers to
opportunities. Today, HSBC Commercial Banking serves businesses
ranging from small enterprises to large multinationals in almost 60
developed and faster-growing markets around the world. Whether it
is working capital, trade finance or payments and cash management
solutions, we provide the tools and expertise that businesses need
to thrive. With a network covering more than three quarters of
global commerce, we make HSBC the world's leading international
trade and business bank. For more information see
www.hsbc.com/1/2/business-and-commercial
About HSBC Bank Canada
HSBC Bank Canada, a subsidiary
of HSBC Holdings plc, is the leading international bank in
Canada. The HSBC Group serves
customers worldwide from over 6,100 offices in 73 countries and
territories in Europe,
Asia, North and Latin America, and the Middle East and North Africa. With assets of US$2,670bn at 31 March
2015, HSBC is one of the world's largest banking and
financial services organizations.
SOURCE HSBC Bank Canada