IN BRIEF

  • Economic growth is expected to remain fairly sluggish in the coming years, held down by subdued prospects in the US, which in turn means that trade flows are expected to grow only modestly in the years ahead.
  • The US is expected to remain Canada’s most important export market, but rising emerging market demand will fuel export growth to these markets.
  • We expect little change in the composition of Canada’s goods exports, with transportation equipment and petroleum products the most important sectors. Trade in services is increasingly important, led by B2B service exports to the US.

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About the HSBC Trade Forecast – Modelled by Oxford Economics

Oxford Economics has tailored a unique service for HSBC which forecasts bilateral trade in goods and services, based on HSBC’s own analysis and forecasts of the world economy. A top-down approach is employed, with Oxford Economics’ suite of models used to ensure consistency between HSBC’s forecasts for economic growth and exchange rates in key countries and the more granular projections for bilateral trade flows presented here.

Oxford Economics employs a global modelling framework, with headline bilateral trade forecasts constructed as a function of demand in the destination market and the exporter’s competitiveness (as measured by unit labour costs adjusted for the exchange rate). Exports, imports and trade balances are identified, with both historical estimates and forecasts for the periods 2016-20 and 2021-30.

These headline bilateral trade forecasts for goods and services are also disaggregated by sector, using Oxford Economics’ Industry forecasts to inform future production trends and taking into account the historic relationship between output and exports in each sector, by country:

  • For trade in goods, 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.
  • For trade in services, we identify five broad sectors: B2B and other services, tourism & travel, transport & distribution, financial services, ICT services and construction.

Oxford Economics produces a global report for HSBC, as well as country specific reports on the following 23 countries: Argentina, Australia, Bangladesh, Canada, China, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Japan, Malaysia, Mexico, Poland, Saudi Arabia, Singapore, Turkey, UAE, UK, USA and Vietnam. The analysis also includes trade with Brazil and Korea for a total sample of 25 key trading nations.

All trade flows data are reported in nominal US-dollar value terms (using market exchange rates) unless otherwise specified. This means that fluctuations in a country’s terms-of-trade due to relative price and exchange rate effects are reflected in the data.

The projections assume unchanged national policies and do not take account of potential new reforms, whose implementation remains uncertain. Thus, any effects from regional or sectoral trade agreements would be in addition to the results shown here.

This document is issued by HSBC Bank plc. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. It is not intended for distribution to anyone located in or resident in jurisdictions which restrict the distribution of this document. It shall not be copied, reproduced, transmitted or further distributed by any recipient. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. The views and opinions expressed by contributors are their own and not necessarily those of HSBC Bank plc. Under no circumstances will HSBC Bank plc or the contributors be liable for any loss caused by reliance on any opinion or statement made in this document.