One factor binds all 23 economies surveyed in HSBC’s latest Trade Forecast. Despite widely varying fortunes, every one of them is set to see a boost in infrastructure-related trade as a percentage of exports.
Imports of machinery and transport equipment will rise as manufacturing production increases between now and 2030. This trend will be most marked in the fast-growing economies of Vietnam, Malaysia and Indonesia, followed by India and Bangladesh.
A second strand to the infrastructure phenomenon will be a rising demand for the intermediate goods required for infrastructure – from tools and minerals to buildings.
The report reflects different countries’ models of industrial capacity, infrastructure spend and wealth creation.
India, for instance, has managed to grow without the infrastructure focus of other Asian countries – but infrastructure bottlenecks are now blamed for slowing its progress. As it becomes wealthier, it will increasingly build up its infrastructure.
Meanwhile, advanced economies such as the US, UK and Germany will need to continue investing in infrastructure to stay competitive in supplying related goods to the rest of the world.
The outlook for infrastructure is a promising one for corporates – not only those directly involved in importing and exporting infrastructure goods, but also for those trading in the merchandise that can be manufactured as a result.
The Trade Forecast chimed with the vision and ambition of delegates at the Global Connections International Exchange in Mexico City, where the research findings were launched.
Mario Romero, CFO of Mexico-based water tank manufacturer Grupo Rotoplas, saw the research reflected not only in his own company – which is investing heavily in equipment from several continents to boost capacity – but at a country level too.
“We export to Brazil, and last year several weeks of union demonstrations there caused huge uncertainty and supply chain disruptions,” he said. “So Brazil badly needs to invest in new ports and alternative transport routes.
“The same applies in other countries. The Chinese government may promote low labour costs inland, but there’s a freight cost attached to that. Any economy that wants to stay competitive needs to be investing in infrastructure now.”
Alfred Napolitano, CEO of Canadian automotive component supplier Bend All, added: “Infrastructure investment is key. The US interstate highway system helped the country develop trade by making it easy to move goods and to get around.
“I miss that connectivity when I’m travelling in Mexico, and I was reassured to learn at the event that the Mexican government has major highway investment under way.”