Services prove safer bet amid trade slump

While global merchandise exports have probably contracted by about 3 per cent this year, cross-border sales of services such as tourism, banking, construction and software development have risen by 1 per cent, according to HSBC’s “Global Trade Forecast”, which includes a country-by-country analysis of trade in services. 
If governments refrain from introducing impediments to trade, global goods exports are expected to recover gradually by 3 per cent next year and then 6 per cent a year to 2030. 
Services will average 7-per-cent annual growth to contribute US$12.4 trillion (Bt446 trillion) to global trade flows in 2030, up from an estimated $4.9 trillion this year. 
However, if new tariff and non-tariff barriers are implemented, whether due to US trade policy changes mooted by president-elect Donald Trump or a “hard Brexit” in the UK, the goods and services trade in 2030 could drop by 3 per cent to $48.8 trillion from a current projection of $50 trillion.
Natalie Blyth, global head of trade and receivables finance, said recently that this complete picture of global commerce, spanning services as well as merchandise, clearly shows the value of cross-border trade to economies and diversification to long-term business growth. 
“We can see that technological advances, rising consumer spending and falling travel costs are boosting the services sector even as factors such as commodity price volatility and subdued investment spending weigh on growth in goods trade.”

Bilateral trade 
In their analysis of bilateral trade between 25 key trading nations, HSBC and research partner Oxford Economics found that services have outstripped goods in trade growth since the global financial crisis. 
This is partly down to spending on services being less affected by fluctuations in economic activity than spending on goods.
Trade in business-to-business and information and communications technology services has flourished, averaging growth of 9 per cent and 12 per cent per year from 2000-15 as business models evolved to exploit| new technologies such as cloud-based data-sharing.
The US, UK, China, Germany and France were the world’s top services exporters last year, and will remain so in 2030, but most developed markets will lose share as today’s emerging economies develop their workforce skills and digital infrastructure. 
India, for example, is already a highly successful exporter of business process outsourcing and support services for finance, medicine and engineering, and is set to increase these exports in the coming years.
While trade in services continues to thrive, it is dwarfed by global trade in goods. The latter will be worth about $37 trillion by 2030, or 75 per cent of total trade.
Likewise, services in Asean have grown in importance and will continue to be a key driver of regional GDP. 
For Thailand, the services sector contributed 58 per cent of GDP last year, after Singapore and the Philippines at 76.5 per cent and 62.0 per cent. 
Services exports from most Asean economies have risen strongly, and the trend seems to be gaining momentum, despite the weak outlook for merchandise exports. 
Solid growth in the tourism industry and plans for the further liberalisation of the financial sector by the Bank of Thailand imply |that services expansion in Thailand will likely continue.