U.S. to Lead in Global Services Exports to 2030
While market uncertainty continues to dampen the flow of goods across borders, new research from HSBC uncovers a bright future for global services trade. And nowhere is this more apparent than in the United States, where services exports are forecast to reach $1.6 trillion by 2030.
The global report provides a comprehensive country-by-country analysis of trade in services. Breaking new ground in macro research, the report has captured current and historical statistics on bilateral trade in services for 25 key trading nations including the United States, providing insight into the evolution of services trade.
While the value of global merchandise exports has contracted by about three percent this year (in U.S. dollar nominal terms), crossborder sales of services such as tourism, banking, construction and software development have risen by one percent during the same period.
“Though it can be difficult to conceptualize and measure trade in services, we must not underestimate the strategic importance of the services sector to the global economy,” said Inwha Huh, Head of Global Trade and Receivables Finance, North America, HSBC.
The research also reveals that the United States is the global leader in services exports, accounting for nearly 16 percent of the world’s total exports in 2015, more than two times services heavyweights the United Kingdom and China (seven percent and six percent respectively).
“As a country with a highly skilled and productive workforce, the United States has a competitive advantage in the services industry particularly in business services and IT,” said Huh. “Indeed, we’ve seen this play out over the last 15 years in the U.S. with services exports rising about seven percent annually from 2000 to 2015.”
Emerging markets, particularly those in Asia, are gaining momentum in services trade spurred by technological advances, rising consumer spending, and falling business and travel costs. The research found that in 2015, services accounted for more than a third (36 percent) of India’s total exports, a number that has grown from 28 percent in 2000.
Commenting on this structural shift in the services sector, Huh said: “India is a perfect example. As a major exporter of business process outsourcing and support services for finance, medicine, and engineering, India is now home to more services companies and expertise.”
“We will see more growth in services across Asia and other emerging markets as their skilled workforce expands, their digital infrastructure improves, and they’re able to offer specialized business and professional services to the rest of the world as a result,” Huh added. “With these emerging markets taking on a bigger share of services activity globally, we believe the share of many developed economies’ services sectors may shrink.”
According to the research, the most pronounced U.S. opportunities may lie within business-to-business (B2B) services. Already the leader among U.S. services exports, B2B alone is forecast to grow seven percent per year through 2030.
Huh believes the U.S. services opportunity is “ripe for picking, but more emphasis needs to be placed on making it a more strategic part of the trade conversation.”
“While there is some uncertainty about the future of trade liberalization and policy and there are certainly barriers to overcome,” Huh concluded, “the upside to services trade is immense. Technological advances, low-cost outsourcing providers, and the demand of a rising global middle class will shape the future of a critical new trade landscape. For international organizations and policy-makers alike to maximize this opportunity, the time to elevate services in global trade dialogue is now.”