UAE is second in world trade confidence index

The UAE has been ranked second in the world in the HSBC Trade Confidence Index released on Sunday.

Traders in the Middle East reported high levels of confidence in the market once again, according to the index. The UAE results showed a slight drop from the first half of the year, when the country reported the highest levels of confidence globally, to report an index score of 125, in second place behind India.

Saudi Arabia registered a score of 118, above the global average of 116, and in line with the overall emerging markets average of 120.

In the UAE, which has a trade turnover to GDP ratio of 140 per cent, there has been a significant move by the Federal Government to build activity in the trade sector to benefit the wider economy. These initiatives have been well received in the Emirates, with 47 per cent of respondents indicating that government trade regulation is likely to have a favourable impact.

"We are happy that the international business community continues to view the UAE with exceptional confidence," said Sheikha Lubna Al Qasimi, UAE Minister of Foreign Trade.

"The survey results will be of great help in disseminating our business policies and implemented plans and highlighting our success in enhancing our commercial environments. They will also reflect the flexibility enjoyed by our commercial sector and the national economy as a whole."

"We are also pleased to learn that India has assumed the top spot in global trade confidence. India is our leading foreign trade partner so its commercial success will definitely have a positive impact in our bilateral transactions," added Sheikha Lubna.

The results underline the critical role of China and Southeast Asia to traders in the Middle East, supporting HSBC's focus on emerging markets and highlighting the growing importance of inter-emerging market trade. The 4th wave of the HSBC Trade Confidence Index shows that 60% of traders in the Middle East report that they are currently trading with Greater China, and 33 per cent identified this region as one of the most promising areas for growth in the coming six months.

In line with this shift in focus, 6 per cent of regional respondents already expect to trade in Chinese Yuan (commonly known as Renminbi, or RMB) in the coming six months, since the People's Bank of China, China's central bank, expanded its RMB Trade Settlement Pilot Scheme in June 2010. Previously, settlement in RMB for cross border trades was only permitted between five pilot cities in mainland China, Hong Kong, Macau and the member countries of the Association of Southeast Asian Nations.

"HSBC has already seen, and successfully met, demand for settlement in RMB from a number of our existing customers with business operations in China," said Simon Vaughan Johnson, Head of Commercial Banking, HSBC Middle East and North Africa.

"Research conducted by the Bank suggests that the RMB will become one of the world's global currencies within the next five years, and this latest issue of the HSBC Trade Confidence Index clearly demonstrates the importance of China to regional traders, and a continued appetite for Eastern expansion."

Middle Eastern traders also showed a renewed confidence in the financial sector as a source for trade finance, with 37 per cent looking to banks for future trade financing requirements, and 44 per cent noting increased use of trade finance through banks as a strategy to avoid buyer default.

"The recent scores have leveled as traders in the region get back to business after a turbulent period in 2009, and return to growth in early 2010," commented Kersi Patel, Head of Trade & Supply Chain, HSBC Middle East, North Africa. "This focus on growing 'real' business has resulted in many companies trusting the financing and security of their trade receivables to the banks. Roughly half of the UAE respondents see a requirement for increased trade finance in the coming months, and banks such as HSBC are well placed to service this demand."

The HSBC Trade Confidence Index, now in its fourth bi-annual iteration, is an international survey on small and mid-market businesses engaged in cross-border trade, which gauges sentiment and expectations on trade activity and business growth in the next 6 months.

The survey is conducted by TNS on behalf of the bank, across 5,124 exporters, importers and traders in Australia, India, Hong Kong, mainland China, Singapore, United Arab Emirates, Vietnam, Indonesia, Malaysia, UK, USA, Brazil, Canada, France, Germany, Mexico, and Saudi Arabia.
 

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