U.S. Import Supremacy Seen Falling to China and Germany b
Germany and China will leapfrog the U.S. to become the world’s largest importers by 2026, according to a study by HSBC Holdings Plc that also forecast a “tipping point” in the balance of trade power in the next five years.
The shift means growth in traditionally export-driven countries will come from imports, HSBC said today in its Global Connections report. Imports in China, India and Brazil, which along with Russia make up the BRIC bloc, will begin expanding more than exports over the next five years in a trend that will last through at least 2026, it said.
“We will soon see that imports will grow faster than exports in emerging markets,” Alan Keir, HSBC’s London-based global head of commercial banking, said in an e-mailed statement. “This will signify a shift where traditionally export-driven countries will drive developed and emerging market growth as their own trade demands become more powerful.”
Emerging economies will underpin global growth this year and next as the euro region’s debt crisis weighs down wealthy nations, the International Monetary Fund said in a June 20 report. While industrialized countries “clearly still represent the largest share of global trade by volume,” growth is easing, particularly in Europe, and emerging nations are outpacing the developed world in terms of speed of trade expansion, HSBC said.
Still, Jim O’Neill, who as Goldman Sachs Group Inc.’s chief economist coined the BRICs term in 2001, warned this month that growth in the four nations may be slowing. O’Neill, now chairman of Goldman Sachs Asset Management, said his opinion that Brazil, Russia, India and China would buoy the global economy faces “a more challenging test” as investors dump the countries’ stocks.
China pared its growth target to the lowest since 2004, Standard & Poor’s may cut India’s investment-grade credit rating, Brazil is on pace to expand less than 3 percent for a second straight year and falling oil prices may hurt Russia.
HSBC predicts that emerging markets will enjoy the biggest gains in trade, with Latin America up 6 percent and Asia 5.4 percent to 2016. Chinese import growth will outpace export expansion 5.1 percent to 4.7 percent. Indian exports will gain 5.4 percent compared with a 7.2 percent rise in imports.
Brazilian and Chinese car imports will climb 13 percent and 12 percent, respectively, to 2016 while Indian auto exports will rise almost 13 percent. Imports of medicines and so-called biopharma products will grow an annualized 5.3 percent and 6.6 percent, driven by demand from emerging markets and supplied by the U.S. and Europe, it said.
“The message for international businesses, small or large, is to look at the bigger picture,” Keir said. “Those in developed nations have to look beyond their borders at the opportunities in rapidly growing markets, while emerging-market businesses need to access the growth of these new trade powerhouses closer to home.”
Exports from the U.S., the U.K., France and Spain will grow at a faster pace than imports in the coming 15 years, according to HSBC. China will become the dominant trade nation “by some distance” as its “strong growth trajectory will result in it overtaking the U.S. as the world’s second-largest importer after Germany, and strengthening its position as the world’s largest exporter by 2026,” HSBC said.
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