OPPORTUNITY TO INCREASE UK EXPORTS TO EMERGING MARKETS

Standard Chartered Launches G7 to E7 Trade Performance IndexUK to E7: US$65 billion Future Trade Opportunity

Standard Chartered launches its G7 to E7 Trade Performance Index (Index), which examines the trading partnerships of the G7 with E7  (Emerging Seven) economies – Bangladesh, China, India, Indonesia, Nigeria, Pakistan and Vietnam. The UK, US and France stand to realise the greatest gains if they can fulfil their E7 trade potential. Germany tops the performance table as the only country to currently exceed its total E7 trade potential.

The Index reveals that G7 nations and companies are underperforming in their export trade to the E7. Of the 49 trade routes between individual G7 and E7 countries, only nine currently exceed or meet expectations. The remaining 40 trade routes underperform by a total of US$162 billion against their export potential. This constitutes a 30% annual growth opportunity for the G7. The E7 represent a critical highway to future growth for the G7 in 2018 and beyond.

UK Opportunities

The UK stands to realise some of the greatest gains among the G7 if it can fulfil its E7 trade potential. If the UK’s E7 exports were to meet current expectations, the country’s overall trade to the E7 would increase by 43%.

UK businesses underperformed in their export trade compared to their potential by $4.6 billion with China and $3.6 billion with India. These are two of the top ten biggest G7 to E7 opportunities by value.

Total predicted exports to the E7 could increase by US$16.9 billion to US$64.9 billion when the UK leaves the EU, reflecting the potential for increasing trade with developing countries when outside of the EU. The additional US$16.9 billion opportunity excludes assumptions on potential Brexit outcomes and does not reflect the presumed loss in UK exports to the EU.

Michael Vrontamitis, Head of Trade for Europe and Americas, Standard Chartered: “With the UK settling into a slower pace of growth and Brexit on the horizon, UK businesses need to look more widely for growth. The Standard Chartered G7 to E7 Trade Performance Index reveals that the UK has much to gain from accelerating its export performance in the seven economies we have identified as the Emerging Seven (E7). Our Index shows that after the UK leaves the EU if it reorients its trade strategy towards the E7, the size of the prize is at least an annual US$65 billion. It is clear that the E7 countries represent multi-billion dollar trading opportunities for the UK and British businesses searching for export diversification and growth. Companies should develop sector specific strategies and corridors, then identify how they can increase their opportunities there.”

G7 to E7: The Standard Chartered Trade Performance Index

Country by Ranking* Total Actual Exports (US$bn) Total Predicted Exports (US$bn)
Germany 109.2 55.7
Canada 23.1 29.3
Japan 154.6 218.7
Italy 21.0 32.3
France 30.7 42.0
US 162.9 209.0
UK 33.6 48.0
Total 535.1 635.0

 

* The Index ranks the G7 countries by their actual export trade performance relative to their predicted exports to E7 countries. Countries are ranked higher on the Index if their actual export for each E7 trade route exceeds export potential, while they rank lower if their actual export for each trade route does not meet the predicted export.

Key Findings for the Remaining G7:

USA

  • The US is currently the largest exporter to the E7 overall, but it is falling below potential by over a quarter (28.3%).

France

  • France is exporting a quarter less to the E7 than its potential and could grow overall exports by 2.4% by meeting predicted exports to the E7.

Italy

  • Italy could experience a 2.5% uplift in exports, or US$11 billion annually, if it were to make the most of the opportunities in the E7.

Japan

  • Japan has significant opportunities in the E7. Japanese businesses could increase exports to the E7 by US$69 billion, which would give the entire economy a 10.7% boost.

Canada

  • Canada falls below its potential trade expectations with the E7 by over a quarter (28.6%). Its annual total global exports could grow by 1.7% by maximising on E7 trade.

Germany

  • Germany exceeded total predicted value of trade with the E7 – exporting US$109 billion – double what is predicted. Yet it could be at risk of over-reliance to one market – China.

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