Saudi Arabia reported the highest increase in trade confidence in the world in the first quarter of this year, according to a HSBC Trade Confidence Index (TCI) report.
The half year index, developed and published regularly by HSBC, the global partner of the Saudi British bank-SABB, covers a total of 21 markets – including key economies in the Asia-Pacific region, Mena, Latin America, North America and Europe.
The Kingdom’s business community was the most optimistic topping the trade confidence index with an increase of 14 points thanks to the huge positive impact from global exchange rates (up 20 points), the impact of government regulations (up 27 points), and trade volume (up 14 points), the HSBC said in its 5th TCI report.
This confidence leap took Saudi to the second highest in the world, from the seventh position last year.
Registering as the 6th highest score in this round of the HSBC TCI, the UAE remains one of the most positive nations for trade confidence, despite a slight dip from the last round.
The UAE traders still report the highest levels of intra-regional trade, with 64 per cent of respondents reporting trade with the Middle East as their primary region.
Government regulations continue to be seen as a positive driver to UAE trade, with the number of traders viewing the impact of government trade regulation as ‘very favourable’ up a massive 24 points this round, the report added.
Interestingly, exporters and importers around the world remained optimistic about trade prospects in the next six months despite increasing concerns about rising costs, reduced profitability and volatile demand.
In the Mena region, the regional average was the highest in the world at 118, whilst the global HSBC TCI held steady at 114 in the first half of 2011 compared to 116 in the second half of 2010.
This fifth wave of the index shows that Mena traders are most concerned about buyer and supplier risk, with 37 per cent (up 11 points on the previous wave) expecting buyer default risk to increase, and 41 per cent (up 20 point) expecting increasing numbers of suppliers to be unable to meet their arrangements.
The top strategy for reported for managing buyer default risk was greater use of trade finance via banks, with 40 per cent of the results.
Encouragingly, Mena traders were not concerned about volumes of trade, nor do they see intra-regional trade threatened by recent political events. The number who expects trade volumes to stay the same or increase is up 5 points on the previous round, at 80 per cent. A new addition to the HSBC TCI, Egyptian traders have reported a positive score in this first report.