HSBC Global Connections Report – United States

The U.S. is one of the largest and most dynamic economies in the world. With a population of more than 300 million people, the U.S. is a prime destination for investment by foreign companies.

Trade Flows – Exports flows are expected to improve gradually over the next few years as the global economy recovers. Canada, Mexico, and China will persist as America’s top three trade partners through 2030.

Sector Insights – High technological dynamism in the long run underpins America’s exports of high value-added goods to fast-growing emerging markets. Expanded access to domestic energy sources will offer a tailwind for the plastics and chemicals sector.

Overview of Present Situation
Austerity measures are expected to dampen growth to 1.7% in 2013, a deceleration from 2012’s growth of 2.2%. While consumption growth will be unchanged from the prior year, investment will slow from a 7.9% annual rate to a 3.9% annual rate between 2012 and 2013. Growth is then expected to increase to 2.5% as the country distances itself from the effects of austerity and uncertainty in 2012. Export growth will slow to 2.2% in 2013 before increasing moderately to 3.9% in 2014. Reflecting diminished appetite for consumption and investment in 2013, imports will slow to 1.3% in 2013 before increasing somewhat to 2.7% in 2014, which is the same expected pace from 2012.

The top three markets for U.S. exports are Canada, Mexico, and China. The first two are perennial top destinations for U.S. exports as a result of free trade agreements and proximity to the U.S. China’s role in U.S. exports and imports is part of the overall shift in global manufacturing to China over the past two decades, but also forward-looking demand from China for U.S. high value-added products as the country’s consumption share increases. This is partly reflected in the continuing importance of industrial machinery, transportation equipment, and scientific apparatus in U.S. exports in 2030. While the top three export destinations are unchanged out to 2030, in the long run Brazil and Korea will supplant Japan and the U.K. as major export destinations.

Another major influence on trade balances will be the extent of the energy revival occurring in the United States. Due to the advent of hydraulic fracturing technology, shale gas and oil exploitation in the U.S. increased dramatically over the past 10 years, with some forecasters expecting the country to become energy self-sufficient in 2030. To the extent that this prediction holds, trade flows in petroleum products will therefore be somewhat reversed compared to the dynamics of the past few decades.

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