Singapore to overtake Japan as 2nd largest trader by 2026

It may happen 14 years from now, but at least Singapore traders still expect the country’s trade to grow 4.8% annually over the next 5 years.

The HSBC Global Connections study also noted Singapore's increasing trade with its Asian neighbors, as Hong Kong, Malaysia, China and Indonesia emerge as its four largest partners by volume. The report predicted Singapore will overtake Japan to become 2nd largest by 2026.

Here's more from HSBC:

HSBC’s Global Connections report reveals a significant 10-point increase in confidence levels amongst Its export markets are predominantly within Asia as Hong Kong, Malaysia, China and Indonesia emerge as the four largest partners by volume. Singapore will overtake Japan to become 2nd largest by 2026 by leveraging its exports of semi-conductors, diodes and oil.

The forecast also highlights a tipping point in the balance of global trade with imports growing faster than exports in the emerging markets – Brazil, China and India in particular – over the next five years.

Joseph Arena, Head of Global Trade and Receivables Finance, HSBC Singapore, said: “Intra-regional trade is growing in significance. Our research shows that in Asia Pacific, 10 of the top 15 global trading partners are countries from within the same region, and this trend is expected to strengthen to 2026. Singapore businesses would do well to look beyond their home borders at the opportunities in rapidly growing markets for an emerging group of trade partners, trading corridors as well as sectors of opportunity.”

Confidence returns
Singapore’s Trade Confidence Index has risen to 115 since the second half of 2011, which is its second highest index score since the first survey in 2009. Surveyed between April and May this year, the index reveals more than three quarters or 89% of traders expect trade volumes to increase or stay the same. Despite confidence in Singapore, the outlook for the global economy is less positive, with over one third or 36% of respondents expecting to see a decline over the next six months.

Sub-regions within Asia remain the top trade partners for Singapore, which continues over the next six months. India has seen a significant increase in importance since H2 2011, with a 9% rise in those reporting it as a current trade partner. The US, UK and Middle East are cited as trade partners by less Singaporean businesses than six months ago, all dropping by 11%.