Chart of the Day: Singapore to gradually lose global market share

China is forecast to become Singapore’s second largest trading partner by 2030.

The HSBC Global Connections report said:

Malaysia is Singapore’s largest trading partner, a position it is expected to retain in 2030, but the size and pace of growth of the Chinese market means China will rise to become Singapore’s second largest trading partner over this period.

Indeed, Singapore’s exports to Asia (excluding Japan) more generally are forecast to rise by a fairly robust 7% a year on average during 2021-30. But the fastest growing trade routes will be with China, India and Vietnam over this period, with India expected to become Singapore’s fifth largest trading partner by 2030.

Although starting from a low base, export growth to new markets in rapidly-growing sub-Saharan Africa will accelerate to around 5% a year during 2021-30. Exports to the Middle East and North Africa will also rise at a similar pace over this period. From this region, Egypt will be one of the fastest growing trade routes, with growth averaging 6% a year.

The weakness of demand in the Eurozone is such that Singapore’s exports to Europe (excluding Russia) are expected to be largely flat from 2013-15, with growth subsequently recovering to just 3% a year on average in the decade to 2030. Exports to mature markets in Australia, New Zealand and Oceania are also expected to remain lacklustre in the medium term, with growth averaging just over 3% a year during 2021-30.

China, India and Vietnam will be the fastest growing routes for imports to Singapore. But Singapore will also begin to look further afield for its imports, with countries such as Turkey growing in importance as a source of imports over the medium term.

Whilst Singapore will continue to be an important trade hub for the South East Asia region, and exports will continue to make up around 200% of Singapore’s GDP, the maturity of the market means Singapore will gradually lose global market share to the emerging markets. But Singapore’s pre-eminence within emerging Asia in electronics, pharmaceuticals and other industries is expected to remain.