Trade in the Middle East and North Africa (MENA) region is expected to grow by 131% to 2026, faster than world trade growth over the same period (86%), according to HSBC's latest Trade Connections report. While hydrocarbons remain a key trading focus for the region, the increase in importance of iron and steel underline the pace of industrial growth in MENA. Tim Reid, Regional Head of Commercial Banking, HSBC Bank Middle East said: “There is no denying the challenges the region has faced and continue to face this year. Nevertheless today's data very much supports our belief in the long term economic potential of the region. As the region's leading international trade bank, we know that trade lies at the core of ensuring international economic recovery particularly as businesses explore new trade corridors and take advantage of the new global opportunities. The Middle East as a whole remains an ideal hub for North to South, East to West and intra-regional trade flows. Businesses should continue to feel confident about the future."
The quarterly forecast shows that not only will the MENA region grow its trade at a substantially faster rate than the rest of the world, but that international business are becoming less reliant on Europe and the US for trade links. The data predicts that the region's current largest trading partners for 2012 will be the USA, China and India, reflecting the dominance of oil, gas and hydrocarbons to the region.
Mr Reid continued: “While two thirds of the worlds discovered crude oil reserves are in the MENA region, we shouldn't just see the region as a pure hydrocarbon story when we look at long term trade. Diversification is not just apparent, but predicted to grow in importance. Whether we look at food commodities or electronic circuits, we get a picture of a region that's not going to be dependent just on oil. And, when we look at our predictions for the region, it's no surprise that iron ore tops the table (14.37%) given the pace of industrial growth in the emerging markets."
Country reports
On a country-by- country basis, assuming no further political crisis, Egypt is predicted to be the region's fastest growing exporter and importer in the medium to long term. Trade growth in Egypt will expand by 167.40% to 2026 with flat rolled iron and steel as its largest and fastest growing export sector (21.70% over the next five years).
Halla Sakr, Deputy CEO and Head of CMB and Strategy HSBC Bank Egypt, commenting on Egypt's data: "Egypt has all the fundamentals for a vibrant economy despite the challenges that it has recently faced. Egypt is part of a region that is increasingly on the radar of international investors, and has a strategic location that connects the East and the West. This data supports our belief in the long term potential of Egypt as one of the key markets in the region and as a priority country for HSBC Group."
Saudi Arabia's trade forecast is set to grow by 107.12% to 2026. Like many of the MENA countries, Saudi Arabia fared comparatively well throughout 2011 despite the global economic downturn and the Eurozone debt crisis. Saudi Arabia will see its export trade increase by 5.52% over the next five years while imports will increase by 6.99%, fuelled by expansion of its own infrastructures.
