The US economy slipped in the early part of 2014, but stronger private sector activity supported by faster wage growth should translate into more robust domestic demand in the rest of the year. Monetary policy should remain very accommodative through mid-2015 while fiscal policy is looser than in previous years. A gradually recovering world economy is expected to provide support for US exports.

Top Five Hotlist Export Destinations
Rank 2013 2030
1 Canada Canada
2 Mexico Mexico
3 China China
4 Japan Brazil
5 Germany Korea
  • The TCI dipped slightly in the first half of 2014, reflecting greater anxiety amongst respondents as some key economies across the globe slowed. However, 60% of respondents still expect stronger trade volumes in the next six months, boding well for future trade flows.
  • Advanced economies will remain the largest trading partners, but markets in Asia and Latin America will become increasingly attractive destinations.
  • US businesses are well positioned to take advantage of a stronger world economy. Increasing focus on fast-growing emerging markets will prove essential.

Current trade position

Despite the downtick in the TCI, the US economy will benefit from increased global trade flows in the coming years. Exporters and importers should both see their trade volumes rise as businesses focus on growth strategies, global demand strengthens and conditions in key industries improve.  Industrial machinery and transport equipment will be among the key industries driving this expansion.       

Spotlight: Healthcare

Why Healthcare is important

Rising global demand for better healthcare as well as important changes in US healthcare policy will have important effects on healthcare goods trade. 

Trade in Healthcare goods for USA (2014-30)

Simon Cooper, Chief Executive of HSBC Commercial Banking.

“Businesses can’t afford to fixate on the risks posed by today’s geopolitical problems and uneven rates of growth at the expense of their future planning. Conditions have undoubtedly been tough for trade recently, but we are now turning a corner. The medium and long term prospects look significantly better for businesses that have prepared themselves for recovery in both developed and developing markets.”

Key findings

  • Growing populations and rising incomes across the world, but primarily in emerging markets, will enhance global demand for US healthcare goods exports given its position as a global innovator in pharmaceuticals, medical technology, and biotech.
  • As a share of GDP, US healthcare spending was 18% in 2012, the highest in the world. Implementation of the Affordable Care Act, alongside demographic change, should contribute to rising healthcare spending in the US, though at a more moderate pace than in the past as reforms help control cost.
  • National and private healthcare budgets will continue to see relief from the cheapening of drugs following the upcoming expiration of patents for many major brand products (the so-called “patent cliff”), which will allow access to a broad range of generic products. In turn, this will support the outlook for healthcare goods imports as production of these drugs moves overseas.
  • But this will also present challenges to US drug makers, who will need to invest significantly in R&D to promote innovation and maintain profitability. Nevertheless, our forecasts indicate that the US pharmaceutical industry will see exports grow on average by 8% a year out to 2030, outpacing the 6% annual growth in total merchandise exports over this period. This will help the US to overtake Germany to become the leading exporter of pharmaceutical products amongst the 25 countries in the HSBC Trade Forecast by 2030.

Short-term snapshot


About 60% of survey respondents expect trade flows to pick up in the upcoming six months. This represents a modest decrease from the previous two surveys and comes largely due to greater worries about the state of the global economy. Survey respondents cited less demand across the globe and reduced appetite in key markets as reasons for the reduced optimism. Increased geopolitical risks may also help to explain some of the increased concerns amongst respondents.

HSBC Trade Confidence Index

The TCI cooled in the first half of 2014, falling to 110 from 115 six months prior. The decline in the index was the result of softer near-term global growth, including a slowdown in emerging markets.  

HSBC Trade Confidence Index

Cross-border business – Despite the slowdown in expectations of demand growth amongst emerging markets, those countries remain the top destinations for business expansion. Indeed, 30% of respondents listed Asia as the most promising region for business expansion in the next six months, slightly down from six months ago, while more than a quarter favoured Latin America.  However, one out of five respondents expect both unfavourable exchange rate movements and policy constraints to encumber their export and import business in the next six months. 

Regional export flows

Corridors of choice

  • Survey respondents see Asia and Latin America as the two regions providing the greatest opportunity for growth. Amongst the Asian markets, respondents were still most optimistic about China, while India replaced Japan as the second highest growth market. Mexico and Brazil remain the most attractive Latin American markets.
  • Interestingly, respondents were less enthusiastic about growth prospects in Europe than six months ago, despite the economy having now more clearly exited recession. This may reflect concerns over the possible spillovers from Russia-Ukraine tensions.
  • From an industrial perspective, manufacturing and construction represent the biggest opportunities in Asia to respondents while opportunities in wholesale and retail are seen as greatest in Latin America. Meanwhile, the construction sector in Europe recorded the highest share of interest amongst US respondents, perhaps reflecting the recent recovery in construction activity in countries such as Spain.  
  • The costs of essential services such as shipping, logistics and storage, government regulation, and insufficient margins were listed as the main factors preventing stronger trade growth.

Opportunities for business

While survey respondents are more cautious about near-term prospects for the global economy, US exporters should be able to benefit from stronger trade flows across the globe in the medium to long term. A highly educated workforce, well-developed production processes, and innovative technology all help ensure US businesses will capture rewards from increased future trade flows. US firms are likely to find the most growth potential in emerging Asia and Latin American markets, and will look to capture a greater share of their business from these regions in the future.

Longer-term outlook

Expectations for the global economy

Emerging markets should continue to capture an increasing share of US exports in the long term. While advanced economies – primarily in Europe – will continue to dominate the US trade sector, Asia and Latin America will become more important export destinations for US exporters.               

Corridors to watch

A rebalancing of US trade will occur over the medium term as the focus shifts away from slower-growing advanced economies and toward faster-growing emerging markets. Of particular importance for US trade will be its rise as a major player in global energy markets; rapidly rising production of unconventional oil and gas, which has already had a positive impact on the trade balance (cutting the petroleum balance by almost 50% since the end of 2008). While the ban on crude oil exports is unlikely to be lifted soon, exports of refined products will contribute to export growth in the years to come.

Amongst the countries presenting the best prospects for US exports, China and India are forecast to lead the way, with export growth averaging 9% a year over the medium term. Amongst the 25 economies in the HSBC Trade Forecast, the top export destinations for the US over the medium term will continue to be Canada, Mexico and China. But Brazil and Korea are expected to make the top five by 2030, displacing the slower-growing economies of Japan and Germany.   

On the import front, China, India and Vietnam will represent the fastest growing suppliers of US imports; for example, we expect imports from China, representing about one-fifth of total imports, to grow by an annual average of 7% through 2020.

USA's projected sector contribution increase in merchandise exports

Focus on Healthcare

  • Global healthcare demand is expected to grow, with fast-growing emerging markets leading the way as rising incomes and growing populations generate increased spending on healthcare.
  • The increasingly globalised healthcare industry means that US firms – which make up a large share of the global healthcare market - should find it easier to enter new markets relative to the past. Pushed higher by foreign demand, we expect US pharmaceutical goods exports will grow by nearly 8% a year through 2030.
  • However, slowly rising domestic demand spurred by Affordable Care Act reforms and an aging of the population will drive the US trade deficit for pharmaceutical goods higher through the forecast horizon. An additional driver of this trend will be increased supplies of generic products from abroad, as US patents on many major brand products expire.


Overall, the US economy is well positioned to take advantage of the rise in global trade volumes over the next decade. What is more, by reorienting some of its exports away from slower-growing advanced economies towards faster-growing emerging markets, US exporters have much to gain. The energy boom should also serve to reduce net oil imports in the years to come.

About the HSBC Trade Forecast – Modelled by Oxford Economics

Oxford Economics has tailored a unique service for HSBC which forecasts bilateral trade for total exports/imports of goods, based on HSBC’s own analysis and forecasts of the world economy to generate a full bilateral set of trade flows for total imports and exports of goods, and balances between 180 pairs of countries. Oxford Economics produces a global report for HSBC, as well as country specific reports on the following 23 countries: Hong Kong, China, Australia, Indonesia, Malaysia, India, Singapore, Vietnam, Bangladesh, Canada, USA, Brazil, Mexico, Argentina, UK, France, Turkey, Germany, Poland, Ireland, UAE, Saudi Arabia, and Egypt. The analysis also includes trade with Japan and Korea for a total sample of 25 key trading nations.

Oxford Economics employs a global modelling framework that ensures full consistency between all economies, in part driven by trade linkages. The forecasts take into account factors such as the rate of demand growth in the destination market and the exporter’s competitiveness. Exports, imports and trade balances are identified, with both historical estimates and forecasts for the periods 2014-16, 2017-20 and 2021-30. Sectors are classified according to the UN’s Standard International Trade Classifications (SITC) system at the two-digit level and grouped into 30 sector headings. More information about the sector modelling can be found on

About the HSBC Trade Confidence Index:

The HSBC Trade Confidence Index is conducted by TNS on behalf of HSBC in a total of 23 markets, and is the largest trade confidence survey globally. The current survey comprises six- month views of 5,200 exporters, importers and traders from small and mid-market enterprises on: trade volume, buyer and supplier risks, the need for trade finance, access to trade finance and the impact of foreign exchange on their businesses. The fieldwork for the current wave (11) was conducted between May - July 2014 and gauges sentiment and expectations on trade activity and business growth in the next six months.

Sector Focus – Methodology

This report also includes special sections on key industries – agriculture, energy, metals, pharmaceuticals, technology and textiles. Based on the same underlying forecasts used for the existing analysis of trends in bilateral trade flows, the report examines how exports/imports of these groups of products are expected to evolve over time. The definitions used in the report for each of these sectors are below:


·Live animals (SITC code 00)

·Meat and meat preparations (SITC code 01)

·Dairy products and birds' eggs (SITC code 02)

·Fish, crustaceans, molluscs (SITC code 03)

·Cereals and cereal preparations (SITC code 04)

·Vegetables and fruit (SITC code 05)

·Sugars, sugar preparations and honey (SITC code 06)

·Coffee, tea, cocoa, spices (SITC code 07)

·Feeding stuff for animals (SITC code 08)

·Other edible products (SITC code 09)

·Beverages (SITC code 11)

·Tobacco (SITC code 12)


·Coal, coke and briquettes (SITC code 32)

·Petroleum and petroleum products (SITC code 33)

·Gas, natural and manufactured (SITC code 34)

·Electric current (SITC code 35)


·Metalliferous ores and metal scrap (SITC code 28)

·Iron and steel (SITC code 67)

·Non-ferrous metals (SITC code 68)

·Other manufactures of metals (SITC code 69)


·Medicinal and pharmaceutical products (SITC code 54)


·Office machines and automatic data-processing machines (SITC code 75)

·Telecommunications equipment (SITC code 76).

·Electrical machinery and appliances (SITC code 77)

·Professional, scientific and controlling instruments and apparatus (SITC code 87)

·Photographic apparatus and optical goods (SITC code 88)

Textiles and Garments

·Textile fibres (SITC code 26)

·Textile yarn, fabrics, made-up articles (SITC code 65)

·Travel goods, handbags and similar containers (SITC code 83)

·Articles of apparel and clothing accessories  (SITC code 84)

·Footwear (SITC code 85)

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