Saudi exports will accelerate momentum to Asian countries, HSBC's latest country Trade Forecast report released.
"Asia will be the fastest growing export market for the UAE, Saudi Arabia and Egypt until 2030," the report said, noting that the coming years will also see a continued shift away from North America and Europe as the traditional suppliers for imports to China, India, Vietnam, Malaysia and Turkey.
Saudi Arabia's trade has been boosted by high world energy prices in the last few years, with exports rising by 45 percent in 2011 and by an estimated 8 percent this year. As a result, Saudi Arabia's largest export markets are the world's major economic powers, headed by China and the US, followed by India. Exports to Asia (excluding Japan) will continue to grow more rapidly than those to other regions, growing by almost 9 percent a year during 2021-30. Imports from India, China, Vietnam and Malaysia and to a lesser extent Turkey, will show the fastest growth in the coming years.
As the region continues to diversify itself, oil will remain a strong component of its long-term trade with the world. The 2011 surge in oil and gas prices underpinned solid growth in the oil producing countries and although oil prices are likely to soften in the near term, we expect to see a renewed upward trend. This will undoubtedly help countries like Saudi Arabia and the UAE to post faster export growth, averaging 8 percent a year from 2016 to 2020. Egypt will also rebound and experience sustained export growth to the MENA region, averaging around 8 percent a year to 2030.
Its fastest growth in exports will be to Asia (excluding Japan), which is seen at 11 percent on average during 2021-30.
According to the Trade Confidence Index, businesses in Saudi Arabia, Egypt and the UAE are upbeat. Saudi Arabia ranks as the second most confident country surveyed with 58 percent of businesses anticipating their trade volumes to increase in the next six months, and 36 percent expecting levels to remain consistent.
54 percent of UAE importers and exporters believe their need for trade finance will increase in the coming months, and 76 percent will look to their banks for funding.
Similarly, Saudi sellers plan to use export credit insurance and traditional trade finance products such as Letters of Credit to help mitigate their exposure to risk.
The Global Forecast notes that by 2020, HSBC expects that forward-thinking companies worldwide will have exploited multiple trade corridors and partnerships, created effective networked supply chains, and tightened efficiency in their operations as a result. This trend continues through 2021-30, contributing to a stabilizing of trade growth which also reflects the growing maturity of emerging markets.
The Saudi Gazette