Does infrastructure boost trade?


By Daniel Hunter

Trade in goods and machinery for infrastructure such as roads, railways and power networks will triple by 2030, as emerging markets increase investment, according to HSBC’s latest Global Connections report.

Between 2013 and 2030 trade relating to infrastructure will grow at an average of 9 per cent a year, the report suggests. Emerging markets are set to play an increasingly significant role with investment in infrastructure to support long-term growth.

The Global Connections report includes the HSBC Trade Forecast, modelled by Oxford Economics for HSBC, based on HSBC’s analysis and forecasts of the world economy.

By 2020 India will overtake the US to become the largest importer of goods for infrastructure — such as metals and minerals — as it builds new transport networks, power plants, offices and factories, according to the report.

China is set to become the top importer of investment equipment — such as specialised machinery — as it invests in manufacturing productivity and moves into increasingly sophisticated products. The report differentiates between goods for infrastructure — the materials needed for infrastructure projects; and investment equipment — the machinery required by businesses to boost production.

The report suggests that Malaysia, Indonesia, Bangladesh and Vietnam are also set for rapid increases in infrastructure-related imports.

“The investment that countries are making in infrastructure is phenomenal and provides a huge opportunity for businesses looking to grow and develop. Rising middle classes across Asia’s rapidly emerging markets will drive significant infrastructure demand in the region," James Emmett, HSBC’s Global Head of Trade and Receivables Finance, said.

Mr Emmett suggested that as China shifted its focus towards higher-value manufacturing, it would open up opportunities for developed economies to supply the country with sophisticated machinery.

The anticipated increase in demand for infrastructure will also create opportunities for exporters based in emerging markets. China is expected to... continued on page two >


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