Singapore's trade confidence hits 2-year high

All eyes on its high-tech sector.

Stronger than expected recovery in leading industrialised nations has boosted global trade confidence but longer term growth will depend on the level of Asia’s investment in R&D to move up value chain, according to HSBC’s latest Trade Forecast.

Singapore’s export-orientated economy will benefit from a gradual improvement in global trade this year. However, overall GDP growth is likely to be constrained by weak housing investment and modest growth in household consumption.

Trade conditions are expected to improve over the next six months, with Singapore’s Trade Confidence Index (TCI) for H2 2013 returning to its highest level for two years. Singapore is the fourth largest supplier of high-technology goods to the global economy. They account for 38% of its merchandise exports. Although Singapore’s ranking will slip to 6th by 2030, high-tech goods will still represent more than a third of total exports.

Joseph Arena, Head of Trade and Receivables Finance, HSBC Singapore, said: “To illustrate the effects of R&D on the value chain picture, the latest Trade Forecast puts the spotlight on the high-tech sector. Increased R&D investment will enable tech-focused countries to move up the value chain in the production of these goods, reducing reliance on foreign imports of components, and, ultimately, originating new technologies domestically.

The Singapore government’s growing emphasis on raising Research & Development (R&D) spending and innovation will enhance the country’s competitiveness, ensuring that it remains a key hub for financial services as well as a trading port for the rest of Asia.”