Exports to surge in march of the makers
Ever since the financial crisis began to subside the debate has raged about how we grow our economy based on manufacturing and trade. As many companies in the West Midlands will tell you, this is nothing new and they have been quietly exporting their way around the globe way before the need to find a new economic model began.
But now, the need to export our way to growth, and not just to Europe, has taken on a new urgency. This week we published a survey, together with RBS, which looks at the extent of UK manufacturing exports to emerging markets and, the prospects for growth in the short and medium term. The results are quite striking and show that West Midlands manufacturers are stepping up their investment plans to capitalise on surging demand from emerging economies and provide a long term growth presence in overseas markets.
The extent of the presence over seas is shown by the fact nine in ten companies are already exporting and exports account for more than half the turnover of two fifths of companies. The survey also shows that 65% of companies saw their exports grow in 2011, with a fifth of companies seeing growth of more than 20%. This year 70% of firms expect exports to increase. In addition, the survey shows the extent to which emerging economies are taking over from slower growth in the Eurozone, although the EU still accounts for around half UK exports.
Ninety per cent of companies already export to developing economies and the survey shows half expect exports to emerging economies to increase this year
India and South East Asia lead the way in the immediate future with almost a third of companies expecting exports to increase in 2012, with China and the Gulf States close behind. In the next five years exports to China and India are expected to increase by 46% and 39% respectively whilst, in contrast the figure for Russia is just under a quarter.
However, the survey throws down a challenge to government to provide the framework to support this potential and increase exports to meet the Chancellor's £1trillion target. In practical terms this means between now and 2020, the UK will need to match the annual growth rate of South Korean goods and services exports of nearly 9% a year in the decade prior to the recession in 2008. West Midlands companies will do their bit to help the UK meet this target but there is no doubt it will be challenging. They key now is for business and government to work together to provide a framework of support, especially for smaller companies, that will help deliver it.