Singapore trade confidence index climbs one measly point in 1H2013

Still-subdued outlook for merchandise exports.

Even as international businesses around the world are reporting increased confidence in global trade prospects according to HSBC’s Trade Confidence Index (TCI), Singapore traders do not seem to share the same high level of optimism.

Confidence amongst Global and Asian traders has risen slightly to 112, up from 111 in the second half of 2012. The TCI report revealed 85% of traders globally expect trade volumes to increase or stay the same in the next six months.

Indian (+7), Hong Kong (+4), Indonesian (+3), Malaysian (+3) and Singaporean (+1) traders registered increases in confidence levels over the coming six months. Decreased confidence levels over the short term were driven by China (-6), Vietnam (-2) and Australia (-2).

With trade in emerging Asia still muted, we expect Singapore’s merchandise exports to contract slightly this year before recovering in 2014. This subdued outlook is reflected in Singapore’s Trade Confidence Index of a positive but relatively low reading of 105 in H1 2013.

Despite the more subdued near-term economic prospects in Emerging Asia, the region represents Singapore’s most promising routes for trade over the next six months according to the HSBC Trade Confidence Survey, with Southeast Asia cited by 32% of respondents and Greater China by 24% of respondents.

HSBC said GDP growth in Singapore rebounded in Q2 2013 to 3.8% on the year, led by strong manufacturing output. Exports have also recovered moderately from low levels so far this year. But the headwinds of weaker but more balanced growth in China and the subdued recovery in the advanced economies will weigh on Singapore’s near-term trade prospects.

HSBC added that Singapore’s geographical position and strong infrastructure means it is ideally situated to tap into the rising middle class in Asia. "This provides a good foothold for businesses to tap into new and expanding trade routes within Asia and the region’s increasingly strong links with Africa and Latin America."