Q2 2014 BCC/DHL Quarterly International Trade Outlook

2ND QUARTER 2014

QUARTERLY INTERNATIONAL

TRADE OUTLOOK

BRITISH CHAMBERS OF COMMERCE IN PARTNERSHIP WITH DHL

The British Chambers of Commerce is the national body for a powerful and influential Network of Accredited Chambers of Commerce across the UK, a Network that directly serves not only its member businesses, but the wider business community. Representing thousands of businesses of all sizes and within all sectors, the British Chambers of Commerce is the voice of the ‘real economy’. Every Chamber sits at the very heart of its local community working with businesses to grow and develop by sharing opportunities, expertise and know-how. No other organisation makes such a difference to business as the British Chambers of Commerce.

Written and researched by: Sukhdeep Dhillon, Global Economic Adviser Suren Thiru, UK Economist Tom Nolan, Policy Manager

Acknowledgements: Mike Spicer, Director of Research

The British Chambers of Commerce 65 Petty France St. James’s Park London SW1H 9EU T: 020 7654 5800 E: [email protected]

www.britishchambers.org.uk

THE BRITISH CHAMBERS OF

COMMERCE

Contents

Foreword 3

DHL/BCC Trade Confidence Index 4

Export index 5

Export & confidence balances 6

Recent performance & outlook 7

Factsheets overview 8-9

Cambodia 10-11

Chile 12-13

Egypt 14-15

India 16-17

Mozambique 18-19

Taiwan 20-21

Overview of trade agreements 22-23

Case study: ‘Our export journey’ 24

How UK exports will change 25

Methodology 26

DHL – THE LOGISTICS COMPANY FOR THE WORLD

About this outlook

DHL is the global market leader in the logistics industry and “The Logistics company for the world”. DHL commits its expertise in international express, air and ocean freight, road and rail transportation, contract logistics and international mail services to its customers. A global network composed of more than 220 countries and territories and about 275,000 employees worldwide offers customers superior service quality and local knowledge to satisfy their supply chain requirements. DHL accepts its social responsibility by supporting climate protection, disaster management and education.

DHL is part of Deutsche Post DHL.

www.dhl.co.uk

The BCC/DHL Quarterly International Trade Outlook sets out the opportunities and risks facing British companies as they trade with the world – with a particular focus on timely information on dynamic new markets. It features the DHL/BCC Trade Confidence Index (TCI) which is a measure of the UK’s exporting health. It builds on the role of accredited Chambers of Commerce – the UK’s premier private-sector providers of international trade support to business – and the modelling expertise of Oxford Economics, who have provided all the economic and trade forecasts presented in this publication.

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Foreword by John LongworthDirector General, British Chambers of Commerce

Confidence levels amongst exporters remain high by historical standards. Both manufacturing and services firms are more confident that their turnover will increase over the next year compared to the previous quarter. In addition the volume of trade documentation issued in Q2 2014 is the highest on record. Furthermore, the International Monetary Fund upgraded its economic forecast for the UK, the largest upgrade of any major western economy.Despite this optimism, our latest International trade survey highlighted that less than half of the businesses we surveyed have ambitions to grow internationally. This proves that we need to do more as a nation to take the fear out of exporting.

If we in Britain are serious about rebalancing our economy, we must invest even more in supporting and promoting international trade. The UK should be matching the level of resourcing dedicated to export support provided by our major international competitors. And government intervention must be more focused in areas that can really make a difference, such as providing greater access to finance to growing firms – particularly when a quarter of non-exporters say that increased funding would encourage them to export.

We at the BCC are proud to be doing our bit, by working in partnership with UK Trade and Investment and the Foreign and Commonwealth Office to develop and accredit British Chambers and business groups in 41 high-growth countries worldwide. This partnership is providing British companies entering new markets with practical advice, support and new business connections each and every day. We are also working with UK Export Finance to link more SMEs to their growing export finance offer. But we need to be even more radical. Only a concerted national campaign and sustained investment will get more UK firms to look beyond our shores for growth opportunities. Otherwise, our ability to rebalance the economy towards exports will be limited.

Foreword by Phil CouchmanCEO, DHL Express UK & Ireland

Chile, a country which features in this edition, has seen an increase in exports from Britain of 72% - equating to nearly £1.2bn worth of goods. A number of British retailers have seen success in this territory over the past six months, exporting some of our best-loved “Brand Britain” products – ranging from high quality design products to Earl Grey tea.

Their success shows that if you know your audience and have done your market research, you can succeed in territories which at first glance might not seem obvious. Entering a new market can be challenging, but there are a wealth of resources available, such as DHL’s Export Advisor Service, which can provide expert insight into local territories and guidance on the services that bodies such as UKTI and local Chambers provide.

I’m personally very proud of DHL’s recent announcement to invest £156m in our UK infrastructure. This demonstrates our confidence in British business and our commitment to the UK export market. Through this investment we will increase our delivery capacity and improve our operational efficiency; we’re focused on delivering a world class logistics service to our customers, so that they can focus on what they do best – their core business.

Ongoing investment is key to help UK businesses meet the government’s 2020 export target and in order to help them succeed, we must ensure that they’re equipped with the information and resources they need.

This quarter’s DHL/BCC Trade Confidence Index (TCI) has seen confidence levels amongst exporters remain high by historical standards. The general mood appears to be optimistic. The report shows that firms in the manufacturing sector are increasingly confident that their turnover will increase over the next 12 months.

4

DHL/BCC Trade Confidence Index (TCI)

----Recession----

% b

alan

ce

Figure one: Balance of �rms who are con�dent that turnover will improve over the next 12 months

Balance �gures are determined by subtracting the percentage of companies reporting decreases in a factor from the percentage of companies reporting increases.

-40

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-20

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Q1 14Q3 13Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

Con�dence levels

• Confidence levels amongst exporters declined in Q2 2014 compared to the previous quarter. Further breakdown showed manufacturing firms are more confident about their turnover while service firms are slightly less confident than they were last quarter.

EXPORT INDEX OVER THE PAST YEAR (2007 = 100)

Q2 13 Q3 13 Q4 13 Q1 14 Q2 14

118.12 116.32 112.69 117.03 119.27

The DHL/BCC Trade Confidence Index (TCI) is a measure of the UK’s exporting health. By analysing trends in trading activity and key factors of exporting firms’ performance, the TCI gives a truly comprehensive picture of theUK’s internationally-trading business community. The TCI is generated from two data sources: the BCC’s Quarterly Economic Survey (Confidence Indicator) and Chamber documentation services (Volume of Export Documentation).

CONFIDENCE INDICATOR

Q2 2014

Many types of exports require supporting commercial documentation. Chambers of Commerce issue documentation required for exports outside the EU and as a result have amassed a significant dataset around UK goods exports. The TCI uses data collected from this process to show both an index of documentation and regional comparisons of exporting activity. (Further details can be found in the methodology on page 26).

5

Export index

• The volume of trade documents issued increased in Q2 2014 and is the highest on record.

• The index number reflecting the volume of trade documents issued by Chambers of Commerce across the UK now stands at 119.27 in Q2 2014.

Percentage Change (%)

Index number 2007=100

Recent quarter compared to last year

Recent quarter on previous quarter

Volume indexof

exportdocumentation

119.27 0.98% 1.9%

-10

0

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Q2 2013 - Q2 2014

Q1 2014 - Q2 2014

N IrelandWalesN EastS WestE MidsW MidsEastY&HScotlandN WestS EastLondon

% c

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Regional comparison - export index

% change in documents issued by Chamber

National

There was a jump in the volume of trade documents issued on the quarter. The index now stands at 119.27 in Q2 2014. This represents an increase of 1.92% on Q1 2014, and an increase of 0.98% on the same quarter in 2013. The second-highest outturn on record was 118.12 in Q2 2013.

Regions and Nations

Most regions and nations of the UK returned an increase in Q2 2014. The highest increase was recorded in the East Midlands (+11.6%). This was followed by Northern Ireland (+9.2%) and Yorkshire & the Humber (+5.3%). The only regions that declined were the North East (-2.%) and the West Midlands (-1.%).

Q2 2014

6

Export and confidence balances

Export orders balance falls but is still very high

by historical standards

• The export order balance decreased by two

points in Q2 2014. It is now +41%, the second-

highest on record. The next highest figure of

+43% was recorded in Q1 2014.

• Further breakdown of the export orders

balance shows that 47% of exporters reported

that their export orders increased in Q2 2014.

While 6% of respondents stated that they

decreased, and 47% stated that orders remained

constant.-40

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0

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Q1 14Q3 13Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

Balance of �rms reporting an increase in export orders

% b

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Export Orders

50

Export orders

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Q1 14Q3 13Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

Balance of �rms reporting an increase in export sales

% b

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Export Sales

50

Export sales

Export sales indicator falls but is also one of the

highest on record

• The export sales balance decreased by three

points in Q2 2014 to +41%. This is the second-

highest figure ever recorded.

• Further breakdown of the export sales balance

shows that 47% of exporters reported that their

export orders increased in Q2 2014, 6% of

respondents stated that they decreased, and 48%

stated that orders remained constant.

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Q1 14Q3 13Q1 13Q3 12Q1 12Q3 11Q1 11Q3 10Q1 10Q3 09Q1 09Q3 08Q1 08Q3 07

----Recession----

Percentage of �rms who expect pro�tability to improve over the next 12 months

% o

f �rm

s

Pro�tability

Profitability confidence

Decrease in percentage of firms who expect

profitability to improve

• Exporters’ confidence that their profitability will

improve over the next twelve months remained

high by historical standards but fell this quarter. In

Q2 2014 the percentage of firms that expect their

profitability to improve decreased, from +62% to

+59%.

• Further breakdown reveals 31% of exporters

reported they expect no change in profitability

and 10% expect profitability to worsen.

Balance figures are determined by subtracting the percentage of companies reporting decreases in a factor from the percentage of companies reporting increases.

7

EconomyGlobal The US economy grew at an annualised rate of 4% in the second quarter, confirming the contraction earlier this year was an aberration and the recovery is back on track. Eurozone’s economy was flat in Q2 2014, compared with growth of 0.2% in the previous quarter. Escalating geopolitical tensions with Russia damaged confidence in Germany, contributing to a 0.2% fall in economic output – the first contraction since the end of 2012. France’s economy stagnated, while Italy has fallen into its third recession since 2008. China’s economy expanded by 7.5% in Q2 2014, up slightly from the 7.4% growth recorded in the previous quarter.

UK The UK economy grew by 0.8% in the second quarter of 2014, the same increase as in the previous quarter. This means that UK economic output is now above its pre-recession peak. In annual terms, the UK economy grew by 3.1% in Q2 2014 compared to Q2 2013. The service sector remains the main driver of economic growth in the UK, with

quarterly growth of 1%. Manufacturing output rose by 0.2% in Q2 2014, while construction recorded a fall of 0.5%

TradeGlobal World trade growth slowed to 0.5% in Q1 2014 from 0.7% in the previous quarter. Both exports and imports from North America declined by 2% and 0.5% in Q1 2014 respectively. Performance in Europe remained muted, with no growth in exports and a decline of 0.5% in imports. Asian exports grew by 1% and imports increased by 2% in Q1 2014.

UK The UK’s trade deficit narrowed in the first three months of 2014, from £5.5 billion in Q4 2013 to £4.2 billion in Q1 2014. However, this improvement was driven by imports contracting at a faster rate than the decline in exports. Imports fell by 1.3% in Q1 2014, more than offsetting a 0.1% fall in exports over the same period. Overall, net trade made a positive 0.3% contribution to UK GDP in the first quarter.

Recent performance

The BCC forecasts that UK exports will grow by 1.9% and imports will grow by 1% in 2014. In 2015, we forecast exports will grow by 4.5% and imports by 3.7%.

UK EXPORTS

+1.9%

BCC forecasts

Outlook

EconomyAlthough the prospects for the global economic growth remain strong, the outlook has become slightly more subdued over recent months. The recovery in the Eurozone, the UK’s major trading partner, remains weak and risks persist, including the prospect of deflation. The recovery in the US economy is firmly underway with growth likely to accelerate in the near term. Economic growth in the emerging Asian economies, and China in particular, is expected to remain strong, if a little weaker than in recent years.

TradeGlobal The World Trade Organisation forecast a pickup in the volume of world trade, to 4.7% in 2014 and 5.3% in 2015.

UK The BCC forecasts a net trade balance in goods and services of -1.4% of GDP in 2014, before improving to -1.1% of GDP in 2016. The BCC forecasts a gradual medium-term progress in reducing the trade deficit, mainly due to a higher services surplus.

Q2 2014

UK IMPORTS

+1%

2014

8

Country factsheets that will feature over the course of 2014 reports:

Factsheets

The dynamics of the global economy have changed with a new set of fast-growing markets challenging the position of the established advanced economies. The map below outlines 24 priority markets which are becoming more important in terms of their growth potential and global influence. These countries have been identified to have strong growth prospects and strategic importance for business.

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Q1 Q2 Q3 Q4

Kenya Taiwan Hungary Japan

Ghana Cambodia Slovakia Philippines

Kuwait Mozambique Kazakhstan Algeria

Morocco Chile Burma Angola

Australia Egypt Tanzania New Zealand

China India Brazil United States

This publication series presents facts and figures in an ‘at-a-glance’ factsheet for each country. These factsheets are a concise resource for businesses seeking to trade, with easy-to-digest information on the economic outlook, sector growth, trade outlook and business opportunities within those markets.

Please visit our dedicated international trade website to access additional information on trade related information and online versions of the factsheets:

www.exportbritain.org.uk

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Cambodia is a member of the Association of Southeast Asian Nations (ASEAN). The economy of Cambodia has seen rapid progress in the last decade. Per capita income, although rapidly increasing, is low compared with most neighbouring countries. The main domestic activity is agriculture and its related sub-sectors. The Cambodian Government is working with bilateral and multilateral donors, including the Asian Development Bank, the World Bank and IMF, to address the country’s many pressing needs such as job creation and addressing the skills shortage.

Source: Oxford Economics

Economic snapshot (% annual growth rate)

Over the last decade, Cambodia’s gross domestic product grew at an average rate of 8.2%. In 2013, the economy grew by over 7.2%, and it is expected to continue to grow at a similar rate over the next two years. Economic activity remains strongly driven by robust exports, tourism and construction, despite recent floods and some slowdown during the election in July last year. Cambodia, however, remains one of the poorest countries in Asia. The country is heavily reliant on foreign aid, with donor support equivalent to over half of the government’s budget.

Economic outlook

Cambodia’s largest export partners include China, Thailand, Hong Kong, Vietnam and Singapore. Cambodia will begin drawing foreign investment largely from China and neighbouring Vietnam as it begins to move away from its dependence on foreign aid and begin investment in the country’s infrastructure. Imports from Asia will continue to increase in the medium term. Cambodia will continue to largely export to US, Hong Kong, Canada, Vietnam and the UK.

Trade outlook

Cambodia

StrengthsEconomic growth that’s rapidly on the rise.

WeaknessesPoor infrastructure. Poor health and education.

OpportunitiesLowest labour cost in Asia. Cambodia sits on major trade lanes and has access to major ports in Bangkok and Saigon.

ThreatsCosts of transport and power are very high. Low level of foregn direct investment.

SWOT analysis

Capital: Phnom Penh Largest city: Phnom Penh Administrative divisions: 24 provinces Currency: Riel (KHR) Area: 181,035 km2 Population: (2013) 15,205,539 Calling code: +855 Official languages: Khmer

Ease of trading across borders Importing a standard container of goods into Cambodia requires

Source: The World Bank, Trading Across Borders: Doing Business 2013

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2012 2013 2014-17

GDP 7.3 7.2 7.3

Export of goods and services 10.2 15.1 9.0

Import of goods and services 9.0 13.8 8.1

Inflation 2.9 2.9 3.8

Exchange Rate (Per £) 6245 6304 6640

Population 1.8 1.8 1.7

11

Opportunities for UK businesses As Cambodia attempts to end its dependence on foreign aid, the country’s economic potential and natural resources are drawing foreign investment - especially from China and neighbouring Vietnam. Cambodia is a rapidly changing country, with liberal government policy on business, access to larger markets, and a country that offers extensive opportunities. Cambodia offers potential investment opportunities for UK businesses in infrastructure, education, construction, automotive and the health sectors.

How UK’s exports to Cambodia compare Cambodia’s trade with the UK UK exports to Cambodia (2013) - by major product groups

Food, beverages & tobacco

Crude materials & fuel

Chemicals and related products

Manufactured goods

Machinery and transport equipment

Commodities

(Total value £10m)

Sectors to watch:

• Financial and business services • Manufacturing • Construction

Sector segmentation growth

Agriculture, forestry & fisheries

Construction

Financial & business services

Industrial production, excluding construction

Information & communications

Manufacturing

Public services

Retails & wholesale distribution

Forecast for Asia’s economic structure (2021) - Output, value-added, real, % of GDP

4% 1%

45%

13%

37%

4%

18%

28%3%

8%

5%

23%

11%

Source: Oxford EconomicsSource: Eurostat



12

Chile

Capital: Santiago Largest city: Santiago Administrative divisions: 10 regions Currency: Peso (CLP) Area: 756,096.3 km2 Population: (2012) 16,341,929 Calling code: +56 Official language: Spanish

Chile is one of South America’s most stable and prosperous nations. Sound economic policies, maintained consistently since the 1980s, have contributed to steady economic growth in Chile and have more than halved poverty rates. Chile has a market-oriented economy characterised by a high level of foreign trade and a reputation for strong financial institutions. Exports account for approximately one-third of GDP, with commodities making up three-quarters of total exports.


Economic outlook The deceleration in late 2013 was caused by weak performance in the manufacturing and wholesale sectors, while mining activity remained strong. The slowdown in the manufacturing sector appears to be the result of weak investment growth, due to some uncertainty about the economic policies of the new government. Chile has recently diversified its economy away from over-dependence on exports. For 2014, a slowdown in domestic demand, in particular private consumption, combined with a weaker expansion of public consumption will slow growth further.

Trade outlook Chile’s total trade flows nearly stagnated in 2013. Asia dominated Chile’s exports, accounting for 40.3% of the flows of goods and services to and from the country. China, Chile’s top trade partner, accounted 22.3% of the country’s trade. North America followed in the ranking, with 21.2% of Chile’s trade flows. Total trade with Mexico, Canada and the US shrank. Meanwhile, Latin American and Caribbean countries act as the origin and/or destination of 19.4% of Chile’s total imports and exports, followed by Europe.

Ease of trading across borders Importing a standard container of goods into Chile requires


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StrengthsChile has emerged as an attractive destination for foreign investment led by structural reforms.

WeaknessesLack of skilled labour force.

OpportunitiesTaxes in Chile are the lowest in Latin America and well below many European countries.

ThreatsTrade competition compared to Asian peers with low-cost manufacturing.


SWOT analysis

2012 2013 2014-17

GDP 5.5 4.2 3.8




Exchange Rate (Per £) 806 755 785


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Opportunities for UK businesses Buoyed by strong domestic demand and sustained world commodity prices, the Chilean economy continued to expand fast after the 2009 recession. Chile has developed free trade agreements (FTAs) with a range of partner countries in the Americas, Asia, Europe and the Pacific region. Specifically, Chile has signed FTAs with more than 90% of its trade partners, including Australia, China, India, Japan, Mexico, the US, the EU and South Korea. The Chilean business climate presents huge opportunities for UK businesses that sell equipment, technology, and services. There is also demand for training and niche accreditation in the areas of insurance, banking, IT, hospitality and catering.




Manufactured goods


Commodities

(Total value £624m)

6%

12%

10%

46%26%

UK exports to Chile (2013) - by major product groupsHow UK exports to Chile compareChile’s trade with the UK

Sectors to watch:

• Financial and business services • Production • Retail

Sector segmentation growthForecast for Chile’s economic structure (2021) - Output, value-added, real, % of GDP




Construction




Manufacturing

Public services


14

Egypt

Capital: Cairo Largest city: Cairo Administrative divisions: 27 governorates Currency: Egyptian pound (EGP) Area: 1,002,450 km2 Population: (2014) 86,502,500 Calling code: +20 Official language: Arabic

Egypt continues to be a bridge between the European west and Arab east, due to its size and position, the country has established its central role in the region. Egypt is currently the most populous Arab country. Egypt’s economy depends mainly on agriculture, natural gas, and tourism. The Egyptian economy is well diversified, covering sub-sectors as diverse as hydrocarbons, manufacturing, tourism, financial services, and construction. The country has healthy trade relations with African nations, the Middle East countries and EU members.



Economic outlook Economic growth has moderated, standing at just above 2% in both the 2011 and 2012. In 2013, the resilience of private consumption and government consumption has kept the economy from sliding into recession, as investment and exports remained weak. Unceasing violent protests and political instability have adversely affected manufacturing, trade and tourism. Only traditional sectors such as agriculture and mining have remained relatively unscathed.

Trade outlook The principal exports are crude and refined petroleum, cotton, textiles, metal products, and chemicals. Leading imports include machinery and equipment, foodstuffs, chemicals, wood products, fuels, and consumer goods. The chief trade partners are the United States, Italy, Germany, France, and Saudi Arabia.

Ease of trading across borders Importing a standard container of goods into Egypt requires


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StrengthsStrong energy potential: Egypt has the 6th largest oil reserves in Africa.

WeaknessesWith growing local demand, the country is faced with a severe energy shortage.

OpportunitiesThe government announced the allocation of EGP 1.5bn to develop infrastructure for 32 industrial zones in 22 different Egyptian governorates.

ThreatsPolitical instability.

SWOT analysis

2012 2013 2014-17

GDP 2.2 2.1 3.3

Export of goods and services -2.3 4.1 7.0

Import of goods and services 10.8 -1.1 4.1


Exchange Rate (Per £) 9.30 9.95 11.92


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9%

39%

12%

22%

18%

2%

21%

5%

15%

25%

15%

13% 4%

Opportunities for UK businesses Egypt has launched significant reforms to recharge its economy and attract foreign investors recently. The country wants to attract investors from a wide range of industries. The education sector is in robust expansion, with high demand for schools and universities. Egypt’s rail network is in need of significant infrastructural improvement. Other subsectors, including ports and dry ports, offer investment opportunities in value-added services alongside large development projects. Further opportunites for UK businesses exist in renewable energy, chemicals, financial services and healthcare.

How UK exports to Egypt compareEgypt’s trade with the UK UK exports to Egypt (2013) - by major product groups

Sectors to watch:

• Public services • Retail • Financial and business services

Sector segmentation growthForecast for Africa’s economic structure (2021) - Output, value-added, real, % of GDP




Construction




Manufacturing

Public services





Manufactured goods


Commodities

(Total value £82m)

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India

Capital: New Delhi Largest city: Mumbai Administrative divisions: 28 states Currency: Indian rupee (INR) Area: 3,287,263 km2 Population: (2012) 1,210,193,422 Calling code: +91 Official language: Hindi, English

Driven by a growth rate of over 6% in the past two years and a 350 million strong middle-class with increasing purchasing power, the Indian market today is reshaping the world’s economy. India is the seventh-largest country by area and the second-most populous country with over 1.2 billion people. Market-based economic reforms in the early nineties have propelled India into the economic “fast lane” alongside China, making an important contribution to the overall increase in world GDP.



Economic outlook India’s economy grew less than 5% (on an annualised basis) for a second consecutive quarter. GDP rose 4.6% in Q1 2014 from a year earlier, unchanged from the previous quarter. Growth in India’s GDP has been below 5% in seven of the last eight quarters. Manufacturing output fell for the fourth consecutive quarter, while services growth slowed from 6.4% in Q4 2013 to 5.8%. India is a lot less vulnerable to adverse economic shocks than in 2013 with the current account deficit narrowing sharply and the fiscal deficit also improving. Growth of 4.5% in 2014 is expected.

Trade outlook As the Asian economy recovers faster than that of Europe and the US, and as more Asian economies develop into middle-income countries, intra-Asian trade will be a key driver of trade growth in India. China is forecast to increase in importance as an export market, with the rapidly emerging Vietnamese economy also climbing up its importance of trade partners. One fifth of imports into India will originate from the Middle East and North Africa in 10 years time, with growth both supply-chain and commodity-driven.

Importing a standard container of goods into India requiresEase of trading across borders


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StrengthsLarge pool of skilled labour.

WeaknessesCorruption. Dependence on agriculture.

OpportunitiesEmerging middle class. Government reforms. IT and real estate boom.

ThreatsHigh inflation. High interest rate.

SWOT analysis

2012 2013 2014-17

GDP 4.8 4.7 5.6


Import of goods and services 11.6 -1.0 5.6




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Manufactured goods


Commodities

(Total value £4.1bn)


Construction


Industrial production excl. construction


Manufacturing

Public services

Retail & wholesale distribution

16%

2%

7%

27%

1%

47%

18%5%

8%

20%

15%

8%

16%10%

Opportunities for UK businesses The business opportunities, which a few years ago, existed only in the traditional economic heartlands of Mumbai, Delhi and Bangalore have now stretched to the emerging cities of Nagpur, Ahmedabad, Chandigarh, Pune and Jaipur, to name but a few. The Indian Infrastructure sector continues to offer great opportunity for UK businesses. The Chancellor announced that UK Export Finance is to provide £1bn in loans and guarantees for Indian infrastructure projects. The news was announced as part of George Osborne’s trade mission to India. Other sectors which offer UK businesses opportunity include: agribusiness, biotechnology, pharmaceuticals and healthcare sectors.

How UK exports to India compareIndia’s trade with the UK UK exports to India (2013) - by major product groups

Sectors to watch:

• Financial and business services • Retail • Manufacturing

Sector segmentation growth Forecast for India’s economic structure (2021) - Output, value-added, real, % of GDP



18

Mozambique

Capital: Maputo Largest city: Maputo Administrative divisions: 11 provinces Currency: Mozambican metical (MZN) Area: 801,590 km2 Population: (2012) 23,929,708 Calling code: +258 Official language: Portuguese

Mozambique’s economy has dramatically improved over the last 25 years. Growing at around 7% each year, the country’s economy is one of Africa’s strongest performers. Foreign companies have increasingly chosen to invest here, particularly in mining ventures. Mozambique has a wealth of natural resources, including deposits of iron ore, gold, bauxite, graphite, marble and limestone. Despite the growing economy, Mozambique remains one of the world’s poorest countries. This is partly because of its continuing trade imbalance, where more is spent on imports such as food, oil, machinery and manufactured goods, than the country earns from its exports.

Economic outlook Mozambique’s economy remained one of the most dynamic in Africa in 2013, with a 7% rate of growth, in spite of the major flooding which occurred during the first quarter. The main drivers of growth are foreign direct investment and increasing public expenditure. Other dynamic sectors are construction, services, and transport and communication. The progressive increase in coal production and the implementation of large infrastructure projects, coupled with budgetary expansion, are expected to continue to drive growth, with growth projected at 8.5% in 2014 and 8.2% in 2015.

Trade outlook Mozambique’s main trading partners are South Africa, the EU, Japan, and Zimbabwe. Mozambique’s exports are primarily agricultural commodities, especially food products. On the other hand, transportation equipment, machinery, mineral products, and foodstuffs constitute the major imported products.

Ease of trading across borders Importing a standard container of goods into Mozambique requires

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StrengthsLarge gas reserves and abundant mineral resources give Mozambique a solid base for economic development.

WeaknessesWidespread poverty and extremely low development.

OpportunitiesTax-friendly stance towards foreign investors, the government aims to attract more businesses to Mozambique.

ThreatsEconomic susceptibility to weather conditions.




SWOT analysis

2012 2013 2014-17

GDP 7.2 7.1 7.4






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% o

f to

tal i

mp

ort

s o

f M

oza

mb

ique




Manufactured goods


Commodities

(Total value £38m)

Sectors to watch:

• Financial and business services • Public services • Retail

1% 3%2%

66%

4%

24%

2%

21%

5%

15%

25%

15%

13% 4%

Opportunities for UK businesses As Sub-Saharan Africa’s 10th largest economy, with just under 25 million people, Mozambique offers many opportunities for UK businesses. Mozambican domestic production currently fails to meet local needs. Its geographical position opens it to markets in the Middle East and Asia. Mozambique’s energy boom is complemented by a rapid infrastructure build. Yet transport capacity and logistics remain the biggest challenges in the country. Huge opportunities for UK businesses lie in the infrastructure and construction sectors which are a need to address the structural deficiencies in the country.

How UK exports to Mozambique compare Mozambique’s trade with the UKUK exports to Mozambique (2013) - by major product groups

Sector segmentation growthForecast for Africa’s economic structure (2021) - Output, value-added, real, % of GDP

Source: Eurostat Source: Oxford Economics



Construction




Manufacturing

Public services


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Taiwan

Capital: Taipei Largest city: New Taipei Administrative divisions: 22 provinces Currency: New Taiwan dollar (NT$) (TWD) Area: 36,193 km2

Population: (2012) 23,373,517 Calling code: +886 Official languages: Chinese

Increasingly dynamic and diverse, Taiwan, also known as Taipei, China, is the world’s 24th largest economy, the 16th largest exporter, and the 16th largest importer in merchandise trade. Taiwan is an archipelago of 86 islands, with the largest, Taiwan Island, comprising almost 98% of the country’s land mass of 13,900 square miles. One of Asia’s “Four Tigers,” along with South Korea, Singapore and Hong Kong, Taiwan has transformed itself through decades of hard work to a well-industrialised and mature economy. From being an underdeveloped, agriculture-based island, Taiwan has grown to be a world-class leader in technology.



Economic outlook The Taiwanese economy ended 2013 strongly, with GDP growing by 1.8% on the quarter. The expansion was driven by domestic demand, in particular by investment. As a whole GDP grew by 2.1% in 2013, a slightly stronger expansion in 2014 of 2.3% is expected. The main drivers will be more robust consumer spending and rising export growth; as the global outlook gradually improves.

Trade outlook In 2012, Taiwan’s trade was valued at over $650 billion, making it the world’s 19th largest trader. Taiwan’s economy focuses on producing parts and components that are incorporated into final products, often sold by companies from Japan, the US, or the EU. Additionally, Taiwan businesses rely heavily on overseas production networks to make goods for export. Taiwan’s changing international trade and investment patterns have been characterised by growing economic interdependence with China in particular, but also East Asia more broadly.

Ease of trading across borders Importing a standard container of goods into Taiwan requires


6DOCUMENTS

£433DAYS

10

StrengthsSolid manufacturing industry. Increase in the number of start-up companies.

WeaknessesRely on imports to meet a large portion of its energy needs.Lack of credit.

OpportunitiesIntegral part of the supply chain of many global companies. Taiwan has a competitive taxation system, which is one of the key drivers of its industrial growth.

ThreatsPolitical issues with China. Skill shortage.

SWOT analysis

2012 2013 2014-17

GDP 1.5 2.1 3.3


Import of goods and services -2.2 3.9 6.2




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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


0

10

20

30

40

50

60

70

80

% o

f to

tal i

mp

ort

s o

f Ta

iwan




Manufactured goods


Commodities

(Total value £1bn)

18%

6%

0%

22%

23%

31%

3%

15%

29%

27%

10%

14%1%

1%

Opportunities for UK businesses With a population of 23 million, Taiwan is a thriving democracy, vibrant market economy, and a highly attractive export market. Taiwan is a sophisticated consumer market. Taiwan is generally a target market for high-quality, differentiated products rather than commodity items. The best prospects for UK businesses include: electronics, chemicals, information and communications products, transportation equipment, machinery. In order for Taiwan to meet its energy needs, coal, oil and gas are increasingly presenting good export opportunities for UK businesses.

How Taiwan’s imports from the UK compare Taiwan’s trade with the UK UK exports to Taiwan (2013) - by major product groups

Sectors to watch:

• Information and communications • Financial and business services • Construction • Retail

Sector segmentation growthForecast for Taiwan’s economic structure (2021) - Output, value-added, real, % of GDP




Construction




Manufacturing

Public services


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Overview of trade agreements

EU and Customs union: Andorra - Monaco - San Marino - Turkey - French Guiana

European Economic Area: Norway - Iceland - Liechtenstein

Countries with which the EU has concluded preferential trade agreements: Mexico - Chile - Colombia - Peru - Costa Rica - El Salvador - Guatemala - Nicaragua - Honduras - Morocco - Algeria - Tunisia - Egypt - Jordan - Israel - Occupied Palestinian Territory - Lebanon - Syria - Macedonia - Albania - Serbia - Montenegro - Bosnia-Herzegovina - Croatia - Switzerland - South Africa - Republic of Korea (South Korea) - Antigua* & Barbuda* - Belize* - Bahamas* - Barbados* - Dominica* - Dominican Republic* - Granada* - Guyana* - Haiti* - Jamaica* - Papua New Guinea* - St Kitts and Nevis* - St Lucia* - St Vincent and the Grenadines* - Seychelles* - Suriname* - Trinidad and Tobago*

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Source: European Commission

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Countries with which the EU is currently negotiating preferential trade agreements: Canada - India - Singapore - Malaysia - Ukraine - Brazil - Argentina - Uruguay - Paraguay - Saudi Arabia - Botswana* - Cameroon* - Côte d’Ivoire* - Kuwait - Qatar - United Arab Emirates - Fiji* - Oman - Bahrain - Libya - Cook Islands* - Kiribati - Lesotho* - Swaziland* - Madagascar* - Mauritius* - Mozambique* - Marshall Islands* - Micronesia* - Nauru* - Samoa* - Solomon Islands* - Timor Leste* - Tonga* - Tuvalu* - Vanuatu* - Angola* - Namibia* - Comoros* - Djibouti* - Eritrea* - Ethiopia* - Malawi* - Sudan* - Zambia* - Burundi* - Kenya* - Rwanda* - Uganda* - Tanzania* - Central African Republic* - Chad* - Congo* - Democratic Republic of Congo* - Equatorial Guinea* - Gabon* - Sao Tome and Principe* - Benin* - Burkina Faso* - Cape Verde* - Gambia* - Ghana* - Guinea* - Guinea-Bissau* - Liberia* - Mali* - Mauritania* - Niger* - Nigeria* - Senegal* - Sierra Leone* - Togo* - Zambia* - Zimbabwe* - Vietnam - Moldova - Armenia - Georgia - United States of America - Japan

Countries with which the EU is considering opening preferential negotiations: Azerbaijan - Brunei - Indonesia - Philippines - Thailand - Ecuador - Bolivia

*Economic partnership agreements

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Case study: ‘Our export journey’

Accredited Chambers of Commerce are Britain’s export hubs. Chambers of Commerce are the premier source of private sector, business-to-business support for international trade and export. In addition to in-house support, Chambers also partner with government agencies such as UKTI, to ensure companies get the best possible advice and help. And it’s working. Amongst Chamber members, 22% were exporting in 2011 - compared to over 35% today.

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This section brings together the experiences of businesses who have embarked on their export journey. It gives a snapshot of some of the challenges they faced when trying to expand their business’s share of exports or enter new markets.

Paxman Coolers Limited is an innovative British-based family business that has been helping improve the lives of cancer patients throughout the world who are undergoing chemotherapy since 1997.Paxman produce a scalp cooling device that helps prevent hair loss - a distressing side effect of chemotherapy.

Trading internationallySince 2009 the company has established scalp cooling as a common treatment practice in oncology and treatment centres for all cancer chemotherapy patients globally.

‘We have the vision to ensure that every applicable cancer patient, no matter where in the world, has the opportunity to maintain their dignity and normality by keeping their hair.’

Their network of over 25 international distributors has allowed them to leverage key markets to broaden patient and clinician access to their technology throughout the globe. Recent approvals and subsequent partnerships in Australia, Brazil, Japan and South Korea should create substantial growth for the business.

The company has recently invested heavily in the US healthcare market, the largest and most regulated healthcare market in the world, to undertake an FDA clinical study for pre-market approval.

Member of Mid Yorkshire Chamber of Commerce

Exporting tipManaging Director, Richard Paxman: “I am a strong advocate of any new exporter learning best practice and taking advice from experienced exporting companies and I would support any collaboration with companies who are well versed in export for support.

Finally, do your research! Not only understand the market but the culture, this is critical in being successful in building any business relationship!

The BCC are working in partnership with UK Trade and Investment and the Foreign and Commonwealth Office to develop and accredit British Chambers and business groups in 41 high-growth countries worldwide. This partnership will provide companies like mine practical advice, support and new business connections in these dynamic markets, which will be priceless!”

To find out how your local Accredited Chamber can help you on your export journey, visit www.exportbritain.org.uk or join the conversation on Twitter: get #wellconnected and #joinyourchamber.

Paxman

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US$0-999 US$1,000-4,999 US$5,000-9,999 US$10,000-49,999 US$50,000+

How UK exports to the world will change in the next 10 years

UK exports in 2021

UK exports in 2012

Source: Oxford Economics(Millions)

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TCI Methodology

The TCI generates its results from two data sources:

• Questionnaire responses submitted by over 2,000 exporters, derived from the BCC’s Quarterly Economic Survey (QES). The QES is the largest and most representative private sector business survey of its kind.

• Data generated from exporting activity that requires supporting documentation.

Quarterly Economic Survey (QES)

Fieldwork for the survey was conducted between 26 May to 18 June 2014.

Results are split into the following firm size categories:

0-9 employees (micro firms)

10-49 employees (small firms)

50-249 employees (medium firms)

50+ employees (large firms)

Unless otherwise stated, results refer to all exporters responding to the survey. Where results are split between the service and manufacturing sectors, this is stated clearly in the text. Results that are not split by firm size are weighted by the contribution of firm size to total exporting turnover.

Results are represented by either a balance figure or a pure percentage figure. Balance figures are determined by subtracting the percentage of companies reporting decreases in a factor from the percentage of companies reporting increases. Where a balance figure is positive it represents growth; where it is negative, it represents contraction.

Export documentation data

Many types of exports require supporting and commercial documentation to ensure the timely delivery of goods and timely payment. Accredited British Chambers of Commerce administer documentation required for exports outside the EU and have amassed a significant dataset around UK goods exports as a result. The TCI uses data collected from this process to show both an index of documentation and regional comparisons of exporting activity.

Oxford Economics

The Quarterly International Trade Outlook also draws upon the modelling expertise of Oxford Economics, who have provided all the economic and trade forecasts presented in this publication.

Oxford Economics was founded in 1981 to provide independent forecasting and analysis tailored to the needs of economists and planners in government and business. It is now one of the world’s leading providers of economic analysis, advice and models, with over 300 clients including international organisations, government departments and central banks around the world, and a large number of multinational blue-chip companies across the whole industrial spectrum.

BRITISH CHAMBERS OF COMMERCE65 PETTY FRANCELONDON SW1H 9EUUNITED KINGDOM

T +44 (0)20 7654 5800E [email protected]

www.britishchambers.org.uk

Q2 2014 BCC/DHL Quarterly International Trade Outlook

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