VANCOUVER, May 4 /CNW/ - Canadian companies will rely more on the
emerging markets of China, Southeast Asia and Latin America, and less
on the United States, as their primary source of trade growth over the
next six months, according to the latest HSBC Trade Confidence Index.
This is echoed by the recently-released annual review of trade by
Statistics Canada, which reported that trade with the United States
decreased from 76.3 per cent of Canada's total trade volume in 2001 to
62.5 per cent in 2010.
The semi-annual HSBC Trade Confidence Index is the broadest
international survey of small and mid-sized businesses engaged in
cross-border trade. Results are framed by respondents in 21 markets:
Canada, Argentina, Australia, Brazil, mainland China, Egypt, France,
Germany, Hong Kong, India, Indonesia, Malaysia, Mexico, Poland, Saudi
Arabia, Singapore, Turkey, Vietnam, the United Kingdom, the United
States, and the United Arab Emirates. The results are used to calculate
an index range from 0 to 200, with 200 representing the highest
confidence level, 0 representing the lowest and 100, neutral.
Global trade confidence remains positive on the HSBC Trade Confidence
Index, at 114 - down by two from October 2010. Canada remains
relatively unchanged at 109 (110 in October 2010, and 109 in May 2010).
Businesses in India (140), Saudi Arabia (132), Mexico (125) and
Indonesia (123) are the most bullish about trade prospects in the next
Following them, in descending order, are: Turkey (122), the United Arab
Emirates (121), Singapore (121), Brazil (116), Vietnam (116), Argentina
(115), China (114), the United States (111), Canada (109), Poland
(108), Germany (107), Australia (107), France (104), the UK (104),
Egypt (102) and Hong Kong (101). Only Malaysia scored in negative
territory, at 97.
Overall, Canadian companies continue to overwhelmingly look to the
United States as a trade partner (96 per cent). Yet they also report
increases in trade relationships with many other regions, namely
Southeast Asia at +7 per cent, Latin America at +7 per cent, Greater
China at +6 per cent, and Western Europe (excluding the UK) at +6 per
Mark Watkinson, Senior Executive Vice President, Head of Commercial
Banking, North America, HSBC said: "For future growth, diversification
beyond traditional markets will be a key strategy. Canadian companies
are turning more and more to opportunities in emerging markets because
the economic environment in the United States remains fragile, and
because the strength of the Canadian dollar makes Canadian goods more
expensive for US importers."
Canadian companies will rely less on the United States for trade growth
For Canadian companies surveyed, the United States remains the most
promising region for trade growth over the next six months, at 38 per
cent. However, this is a 17 percentage point drop from the October 2010
survey. Greater China (18 per cent), Latin America (10 per cent),
Southeast Asia (6 per cent) and Central and Eastern Europe ex Germany (5 per cent) round out the top five growth hot spots.
Global economic outlook
The outlook of Canadian businesses on the global economy over the next
half-year is improving. Just over half of respondents (57 per cent)
expect to see an improvement in the economy over the next half-year, a
9 percentage point increase from the October 2010 Trade Confidence
The new normal is the same as the old normal
Canadian respondents are increasingly comfortable that the global
economy is stabilizing and they are less concerned about future
economic contractions. However, almost one fifth of respondents are
expressing concerns over fluctuations and increases in the cost and
availability of raw materials, many of which have seen price increases
over the past six months.
As a result, respondents' concern that suppliers will not honor trade
agreements rose by 10 per cent over the past six months. Where
fluctuations in cost barely registered as a concern in May 2010, and
not at all in October 2010, it now shares top rank as the leading
reason for suppliers not honoring their trade agreements.
Similarly, suppliers expect a slight increase in the risk of buyers
defaulting on payments, and they will increasingly turn to options like
advance payment, tightened payment terms and export credit insurance in
order to mitigate their risk.
Finally, as the Canadian dollar remains above parity with the U.S.
dollar, the impact on trade flows is noticeable. In fact, 41 per cent
of respondents now say that foreign exchange fluctuations will be
unfavorable, compared to 33 per cent in October 2010.
About the survey
The semi-annual HSBC Trade Confidence Index gauges sentiment and
expectations on trade activity and business growth in the next 6 months
from 6,387 exporters and importers across 21 markets. The survey was
conducted from February to March 2011. The error rate is +/- 5.7%, at a
95 per cent confidence level.
About HSBC Bank Canada
HSBC Bank Canada, a subsidiary of HSBC Holdings plc, has more than 260
offices, including over 140 bank branches, and is the leading
international and trade finance bank in Canada. With around 7,500
offices in 87 countries and territories and assets of US$2,455 billion
at 31 December 2010, the HSBC Group is one of the world's largest
banking and financial services organizations.
SOURCE HSBC Bank Canada
For further information:
| Ernest Yee |
Vice President, Corporate Affairs
HSBC Bank Canada
| || || || || || Fabrice de Dongo |
Senior Manager, Public Affairs
HSBC Bank Canada