UAE leads the world in business confidence: HSBC

Confidence amongst businesses in the UAE on the short term outlook for trade has reached an all-time high since 2009 – jumping 9 points to 141, according to the latest HSBC Trade Confidence Index.

The UAE scored the highest amongst countries surveyed across the globe. An overwhelming 83 per cent of respondents expect trade volumes to increase over the next six months, of which 49 per cent expect a significant pick up in trade. The positive sentiment has been primarily fuelled by a general increase in global demand or in particular key markets.

“We know that UAE based businesses view Asia as their most promising trade corridor over the short term, but it doesn’t come as a surprise that the rest of the Middle East, Europe and North America are also listed in their trading corridors of choice. Thanks to its strategic geographic location, open trade hub, and currency pegged to the US dollar – the UAE can truly leverage its trade position with all regions around the world,” said Nicholas Levitt, Head of Commercial Banking for HSBC Bank Middle East, UAE.

“While oil and demand supply will continue to be crucial in determining the UAE’s trade position, we also expect to see infrastructure and construction, tourism, retail and Government investment in technology to be the main drivers for UAE. Dubai’s successful bid to host Expo 2020 will also have a key role to play in this as the event catapults the country into the centre of the global stage.”

The half yearly HSBC Global Connections Trade Forecast report notes that in the long term, India and China will remain the UAE’s fastest growing trade routes until 2030 – growing at 10 per cent per annum. Turkey and Saudi Arabia will also become increasingly important sources of demand. Focus on the emerging markets also extends to the import side, although the US and Europe will remain high sources of demand.

Egypt Trade Forecast

The report notes that a stronger and more sustainable pick up in the Egyptian economy is dependent on political stability and inflows of Gulf aid. Confidence in trade volumes fell amongst businesses based in Egypt – mainly due to the current political situation. India will continue to be Egypt’s top export destination until 2030 while the US, Turkey and Saudi Arabia will remain significant bilateral partners.

Saudi Arabia Trade Forecast

Although trade confidence amongst businesses weakened slightly in its successive fourth reading, businesses still remain positive that trade volumes will increase in the short term, scoring 126 - well above the global average. By 2030, Saudi’s top three export destinations will be China, India and Korea. Petroleum and its products, chemicals and plastics, will remain the country’s top three export sectors while industrial machinery and transport equipment will drive import growth.

Global Trade

Stronger than expected recovery in leading industrialised nations has boosted global trade confidence, but subdued growth in emerging markets makes for a contrasting trade outlook around the world. Longer-term prospects remain strong for emerging markets, however, and they are expected to be the driving force behind forecasted growth with the value of global merchandise trade averaging 8 per cent per annum to 2030.

Emerging markets are rapidly growing Research and Development investment to capture more of the value of their merchandise exports. This trend is clear in the high-tech sector and illustrates the need for developed economies to invest in innovation to remain competitive.

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