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Businesses are optimistic about their trade outlook according to HSBC

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Businesses are optimistic about their trade outlook according to HSBC

HSBC issued this week the HSBC Navigator survey 2018. The survey shows that businesses are generally optimistic about their trade outlook, while a variety of indicators suggest that world trade is losing momentum.

The broader implications of the escalating US-China trade dispute — including the potential knock-on to industry supply chains and risks to the global economy — may not be fully appreciated by many businesses.

The HSBC Navigator survey suggests that the vast majority (78%) of businesses globally remain positive about the outlook for trade, and a smaller proportion (22%) described the outlook as ‘very positive’. Sentiment appeared broadly consistent across both goods and services providers. The reasons most commonly cited by respondents for having a positive outlook are their assessments of global economic growth and the domestic economy (cited by 31% and 27% of respondents respectively). At a regional level, companies in South America (32%) were most likely to view the environment as ‘very positive’, while firms in Europe (18%) were least likely to express this opinion. While the average response in APAC was close to the global average, there was also a significant degree of variation at the country level – firms in India and Bangladesh were the most positive, for example, while those in South Korea and Hong Kong were among the least positive. This may be linked to the relative exposures of these economies to the outlook for China and associated collateral damage from its trade dispute with the US. Indeed, a majority of firms in South Korea (85%) and Hong Kong (83%) identified geo-political factors as having a negative impact, which was higher than the average for the APAC region (78%).

The HSBC Navigator survey suggests that the vast majority (78%) of businesses globally remain positive about the outlook for trade

HSBC pointed out that “there is growing evidence to suggest that the early months of 2018 marked the cyclical peak for global GDP growth, and a slowdown over coming quarters is like”. The bank also thinks that there is an “escalation” in the trade conflict between the US and China. “Companies need to map their supply chain models to understand their direct and indirect exposure to a potential escalation of the global trade dispute”, the survey said.

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