Trade in services is likely to remain a bright spot for exporters at a time of economic uncertainty and faltering merchandise trade, according to a new HSBC report.
While global goods trade has contracted in 2016, exports of services such as tourism, banking, construction and software development have risen by 1 per cent in nominal terms, according to the latest HSBC Global Trade Forecast. The report, produced in partnership with Oxford Economics, analyses bilateral trade between 25 trading nations.
Natalie Blyth, Global Head of Trade and Receivables Finance, HSBC, said: “Technological advances, rising consumer spending and falling travel costs are boosting the services sector even as factors such as commodity price volatility and subdued investment spending weigh on growth in goods trade.”
"Services exports have grown faster than merchandise and commodities exports since the global financial crisis"
The relative rise of services trade is not a short-term trend. Services exports have grown faster than merchandise and commodities exports since the global financial crisis, the report shows. This is partly because spending on services is less affected by fluctuations in economic activity than spending on goods.
The forecast also looks at anticipated changes in global trading patterns. If governments refrain from introducing new impediments to trade, services exports are expected to average 7 per cent annual growth between now and 2030. The value of global goods exports is expected to expand by 3 per cent in 2017 and then by 6 per cent on average between 2018 and 2030.
The total combined value of goods and services trade in 2030 will be USD50 trillion, according to the report’s projections. If new barriers are implemented, however, due to such factors as US trade policy changes mooted by President-elect Donald Trump and a so-called ‘hard Brexit’ in the UK, the combined value of goods and services trade in 2030 will be about USD48.8 trillion, some 3 per cent lower, the report suggests.
Developed markets have traditionally led services trade with the US, UK, China, Germany and France being the world’s top services exporters in 2015. Developed markets will continue to play a leading role in services trade in the years to 2030, the forecast says – but they will face increasingly stiff competition as today’s emerging economies develop their workforce skills and digital infrastructure. India, for example, is already a highly successful exporter of business process outsourcing and support services for finance, medicine and engineering, and is set to increase these exports in the coming years.
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