1 Global Trade Trends Long Island Import Export Association, May 2011 Andrea Ratay, Senior Trade Sales Manager

1

Global Trade Trends

Long Island Import Export Association, May 2011

Andrea Ratay, Senior Trade Sales Manager

2

Global Macro Trends

Emerging markets are growing faster than developed markets; however growth has slowed and is more balanced

Economic stabilization occurring Conference Board's Leading Economic Index, an indicator of U.S. economic health

rose in March for the ninth straight month U.S. Census Bureau announced retail sales rose 6.6% in 2010.

World trade grows faster than GDP Historically World Trade has grown at a faster pace than GDP World trade growth recovered to 14.5% in 2010 World trade is expected to grow 9.3% over the next ten years

*Source HSBC Emerging Markets Index Q2 2010

3

Neutral

Negative

Positive

111116 116

121 121 122 123 125132

140

114107

102 10410497 101

108115114

107 109

0

20

40

60

80

100

120

140

160

180

200

Malaysia HK Egypt UK France Australia Germany Poland Canada USA China Argentina Vietnam Brazil Singapore UAE Turkey Indonesia Mexico KSA India OverallGlobalIndex

1H111H11

Note: (1) The Overall Global Index is the unweighted average of the 21 markets listed above

Trade and the Global EconomyEmerging Markets Lead Global Trade Confidence

4

107110

108111

60

80

100

120

140

2H09 1H10 2H10 1H11

Neutral

Negative

Positive

U.S. Trade Confidence at its Highest Level since 2H 2009

5

14

48

33

40

11

45

35

6

14

4438

21 2

Note: Figures may not add up to 100% due to rounding and the exclusion of “Don’t know / Refused” responses.

Source: Q1. How do you expect the volume of your import, export business to change in the next 6 months? Do you expect the volume of your import, export business to increase significantly, increase slightly, maintain the same level, decrease slightly or decrease significantly?

Decrease Significantly

Decrease Slightly

Maintain Same Level

Increase Slightly

Increase Significantly

Base: USA n=300

1H10 2H10 1H11 1H10 2H10 1H11 1H10 2H10 1H11 1H10 2H10 1H11 1H10 2H10 1H11%

U.S. Businesses Expect Trade Volumes to Increase

6

5

54

2018

1 2

44

2724

3

57

25

13

1 2


Source: Q13. How do you expect the global economy, to change in the next 6 months? Do you expect the global economy to…?

Decline Significantly

Decline Slightly

Maintain Same Level

Grow Slightly

Grow Significantly

Base: USA n=300


U.S. Businesses Expect Global Economy to Grow

7

1

11

74

11

3 1

15

71

12

2

12

73

8

1 0


Concerns Persist over Risk of Buyers Defaulting on Payments


Decrease Slightly

Maintain Same Level

Increase Slightly


Source: Q2A. How do you expect the risk of your buyers defaulting on payment to change in the next 6 months?

Note: Figures may not add up to 100% due to rounding and the exclusion of “Don’t know / Refused” responses. , excluding pure importers (only import raw materials or semi-finished / finished goods; does not involve in any exports activities, not a commodity trading company, and not an import or export broker / wholesaler).

Base: USA n=265

8 , only those who answered ‘increase significantly’ or ‘increase slightly’ in Q2A

Source: Q2B. What strategies, if any do you intend to put in place over the coming 6 months to overcome non-payment risk from buyers? Multiple mentions.

%

Base: USA n=31

1H11(Change

from 2H10)

3 (-2)

3 (/)

3 (-13)

3 (/)

6 (-3)

10 (-4)

10 (+5)

10 (-13)

19 (+17)

23 (-2)

Suppliers Will Be More Selective about Buyers and Require Advance Payments to Mitigate Non Payment Risk

+Figures with less than 1% mentions are not shown.

Advance payment

Doing less business with particular buyers

Tighten payment terms / duration

Monitor debts / accounting items closely

Examine buyers' credibility / financial background

Export credit insurance (through your financial institutions)

Require cash payment

Limit loan / credit / amount

LC (Letter of Credit) / LC which is of shorter period

Collect debt by company itself or through hiring finance company

Notes:(/) Denotes result is not available as there was no mention in the previous wave.

9

3

14

77

40 1

12

80

61

11

79

51 1


Source: Q3A. How do you expect the risk of suppliers not honoring agreed trade arrangements to change in the next 6 months? Base: USA n=300


Risk of Suppliers Not Honoring Trade Arrangements Continues to Concern Buyers

Decrease significantly Decrease slightly Maintain same

Level Increase slightly Increase significantly

10

%

1H11(Change

from 2H10)

2 (-9)

6 (/)

8 (0)

10 (+2)

20 (+4)

22 (+8)

24 (+5)

24 (0)

Base: USA n=51

Buyers Cite Increases in Costs and Global Economy As Potential Reasons for Suppliers Not Honoring Trade Agreements

+Figures with less than 1% mentions are not shown.

Source: Q3B. Why do you expect the risks of suppliers not honoring agreed trade arrangements to increase significantly / increase slightly? Multiple mentions. , only those who answered ‘increase significantly’ or ‘increase slightly’ in Q3A.

Notes:(/) Denotes result is not available as there was no mention in the previous wave.

Increase in cost

Global economy contracts, business becomes unstable

Financial health of your suppliers is likely to deteriorate

Availability of raw materials declines

Fluctuation in cost

Logistical and transportation capabilities are insufficient

Unwilling to accept flexible payment arrangements such as credit or payment terms

Less business / orders

11

3

27

65

21 2

25

67

52

21

69

41 1


Decrease Slightly

Maintain Same Level

Increase Slightly



Source: Q5A. In the next six months, how do you expect your capacity to access trade finance to change? Base: USA n=300


U.S. Businesses Expect Trade Finance Access to Improve

12

2

24

3236

2 1

25

45

28

0

28

35

26

3 1


Source: Q7. How would you expect exchange rates to impact your import, export business in the next 6 months?

Very Unfavourable Unfavourable Neither Favourable nor unfavourable Favourable Very Favourable

Base: USA n=300


Exchange Rates Seen as Unfavorable and as a Major Barrier to Trade Growth

13

Very Unfavourable Unfavourable Neither Favourable nor unfavourable Favourable Very Favourable

1

18

57

20

1 0

13

60

23

2

17

53

20

3 3


Source: Q8. How would you expect government trade regulation to impact your import, export business in the next 6 months?Base: USA n=300


Government Trade Regulations Being Viewed More Positively

14

%1H11

(Change from 2H10)

Greater China

Latin America

Canada

Southeast Asia

Rest of Asia

Western Europe (excl UK)

Middle East

UK

Australia / New Zealand

Sub-Saharan Africa

Central / Eastern Europe (excl Germany)

Germany

Others

Don't Know / Refused

1 (0)

3 (+2)

3 (/)

27 (+2)

25 (-5)

9 (-6)

8 (+1)

6 (+2)

5 (+2)

4 (-1)

3 (-1)

3 (+1)

2 (+1)

2 (-1)

Greater China and Latin America Represent Greatest Opportunities for Future Trade Growth

Base: USA n=300 Source: Q9. Over the next six months, which of these regions do you see as having the best opportunity for your business growth?

Notes:Greater China includes Hong Kong SAR, Mainland China, Taiwan, Macau(/) Denotes result is not available as there was no mention in the previous wave.

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Summary

U.S. businesses demonstrated their highest level of confidence to date for the Trade Confidence Index

Expectations for growth are tempered by concerns related to rising costs of doing business, fluctuations in foreign exchange rates, narrower margins and volatile demand.

Suppliers are becoming increasingly selective about the buyers they do business with as a way to mitigate risk

China and Latin America are the two biggest growth opportunities for U.S. companies while Canada’s importance is declining

Government trade regulation seen as more favorable versus previous TCI reports

Intra-regional trade continues to underpin global trade activity with emerging markets playing a key role in all facets of future global trade growth

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Disclaimer

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Documents

1 Global Trade Trends Long Island Import Export Association, May 2011 Andrea Ratay, Senior Trade Sales Manager