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Bangladesh: Trade confidence rises sharplyThursday, September 18, 2014 > 09:48:58
Bangladesh's trade confidence rose sharply, by 38 points in six months, which is the second highest among 23 countries globally.
The jump was due to growing demand for its garments from Western buyers and the recent initiatives aimed at making the country's apparel factories safer, according to a survey.
HSBC's latest Trade Confidence Index, which was published yesterday, shows that Bangladesh's score increased to 141 in the first half of 2014, from 103 in the second half of 2013.
Only Egypt is ahead of Bangladesh as the economic climate in the largest Arab country improved in recent times.
Bangladesh outpaced the UAE, India, Indonesia, Saudi Arabia, Turkey, Vietnam, Ireland, Mexico, China, the UK, Brazil, Canada, Malaysia, Poland, the USA, Singapore, Germany, Hong Kong, Australia, France and Argentina.
"The authorities are introducing more safety regulations to the garments sector and this appears to have provided an additional boost to confidence," the banking giant said in a report.
The Trade Confidence Index is prepared by London-based TNS, the world leader in market research, global market information and business analysis, for 23 countries, and is the largest trade confidence survey globally.
The current survey comprises six-month views of 5,200 exporters, importers and traders from small and mid-market enterprises on trade volume, buyer and supplier risks, the need for trade finance, access to trade finance and the impact of foreign exchange on their business.
The fieldwork was conducted between May and July this year and gauged sentiment and expectations on trade activity and business growth in the next six months.
The survey report said shipments from Bangladesh rose 11.9 percent year-on-year in 2013 and went up at a similar pace in the first five months of 2014.
More than 70 percent of the survey respondents said the outlook for trade volumes will improve over the next six months, with almost 80 percent expecting the currency to have a favourable impact on business growth over this period.
About 40 percent of the respondents said that Europe, Bangladesh's biggest trading partner, offers the best opportunity for business growth over the next six months, while one-third point to Asia and 17 percent to North America.
More than a third of the respondents expect demand in key markets to be higher over the next six months, while more than 16 percent generally feel more confident about the coming months.
The US dollar is the currency of choice for more than 85 percent of the survey respondents. Nearly 80 percent see currency movements having a positive impact on trade over the next six months, while more than two thirds see trade agreements as favourable for international business.
But around a quarter of the respondents cited high costs of logistics, shipping and storage as potential constraints on business growth.
On the longer term outlook on Bangladesh, HSBC expects the country to grow rapidly over the remainder of the current decade, and investment, particularly in infrastructure, will continue to rise strongly to support this.
It said industrial machinery is the second largest import sector behind textiles and will continue out to 2030 with the sector contributing almost 20 percent to Bangladesh's import growth.
China, India, Korea and Indonesia will be Bangladesh's fastest growing import partners, taking advantage of geographical proximity, the survey report said. The US, Germany and the UK are Bangladesh's top export partners and this will remain unchanged out to 2030, thanks to strong demand from the West for garments.