As economic and political headwinds slow global trade in commodities and manufactured goods, opportunities linked to services will be more and are expected to form 25 per cent of global trade in a sustained manner by 2030, a report by HSBC has said. Whilst the USD value of global merchandise exports has probably contracted by about 3 per cent this year, cross-border sales of services, such as tourism, banking, construction and software development, has risen by 1 per cent in nominal terms, according to HSBC’s Global Trade Forecast.
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It opined that if governments refrain from introducing new impediments to trade, the value of global goods exports is expected to recover gradually to expand by 3 per cent in 2017 and then 6 per cent a year to 2030.
Services, meanwhile, will average 7 per cent annual growth to contribute USD 12.4 trillion to global trade flows in 2030, up from an estimated USD 4.9 trillion this year, it said.
However, the report said that if new tariff and non-tariff barriers are implemented, whether due to the US trade policy changes mooted by President-elect Donald Trump or a so-called ‘hard Brexit’ in the UK, the combined value of goods and services trade in 2030 could drop by 3 per cent to USD 48.8 trillion from current projection of USD 50 trillion.
“This complete picture of global commerce clearly shows the value of cross-border trade to our economies and the value of diversification to long-term business growth. We can see that technological advances, rising consumer spending and falling travel costs are boosting the services sector even as factors like commodity price volatility and subdued investment spending weigh on growth in goods trade,” HSBC Global Head of Trade and Receivables Finance Natalie Blyth said.
In their analysis of bilateral trade between 25 key trading nations, HSBC and research partner Oxford Economics found that growth in services exports has outstripped growth in goods trade since the global financial crisis.
This is partly because spending on services is less affected by fluctuations in economic activity than spending on goods, it said.
Trade in business-to-business (B2B) and information and communications technology (ICT) services in particular has flourished with an average growth of 9 per cent and 12 per cent per year, respectively, between 2000 and 2015 as businesses evolved to exploit new technologies like cloud-based data sharing, the report said.
The US, UK, China, Germany and France were the world’s top exporters of services in 2015, and will remain so in 2030, but most developed markets will lose share as today’s emerging economies develop their workforce skills and digital infrastructure, it further said.
India, for example, is already a highly successful exporter of business process outsourcing (BPO) and support services for finance, medicine and engineering, and is set to increase these exports in the coming years, it added.