BBC QITO Q3 2014 - Full Report

3RD 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

Brazil 10-11

Myanmar 12-13

Hungary 14-15

Kazakhstan 16-17

Slovakia 18-19

Tanzania 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.

2

3

Foreword by John LongworthDirector General, British Chambers of Commerce

The UK’s recent growth record has outstripped not just the Eurozone economies, but nearly all developed countries around the world. Yet we’re starting to see signs this performance is tailing off slightly – including our export performance. The BCC’s own Quarterly Economic Survey, published earlier this month, demonstrates that businesses while still positive about the future are finding it tougher to expand their order books. We cannot ignore the fact that the UK’s overall export performance isn’t stellar. While we have tens of thousands of great companies doing business right across the world, we’re not doing well enough across the board.

The government has set two major ambitions: to double the value of exports to £1tn by 2020, and to get 100,000 additional companies exporting. Recent performance suggests that reaching these targets will be a huge challenge, unless there is a radical change both in the levels of support available, to help more companies develop an appetite for export.

The exciting thing is that we are doing our part: We’ve ramped up our services in the UK, so that a business in any

town, city or county can get export assistance via its local Accredited Chamber of Commerce.

We’ve worked hard to develop a global network of British Chambers and business groups. Together with partners, I’m pleased to report that we are making exciting progress, with a wider range of practical business support in place in 20 high growth markets, with more to come in future.

Greater efforts are still needed to support and promote UK exports, so that more UK companies can penetrate high-growth markets overseas. We want to do still more, together with DHL and other partners, to improve awareness of the growth opportunities overseas, break down the fear of exporting, and provide easy access to practical support on the ground. At the same time, the level of resource dedicated by government to supporting exporters must increase.

Foreword by Phil CouchmanCEO, DHL Express UK & Ireland

However, the report also reveals that confidence levels for both manufacturing and service exporters have fallen and the volume of growth ever so slightly slowed.

With the current media scrutiny and ongoing discussion about the future of the UK’s position in the EU creating some uncertainty, it is important to remember that there are still great opportunities and a huge demand for British products within and beyond Europe. There is also a wealth of resources available for UK SMEs, such as their local Chambers and DHL’s Export Advisor Service, should they have any questions regarding their export strategy.

As we enter an election year, it is important that any

uncertainty does not stall the growth ambitions of UK’s existing and future exporters. Ongoing investment is key to meet the Government’s 2020 export target and it is crucial that businesses are equipped with the information and resources they need. At DHL we have invested heavily in our people and infrastructure to ensure we continue to deliver a word-class service, which enables UK businesses to expand and thrive in global markets. This level of support is crucial, especially for SME’s as they commence their export journey

This quarter’s DHL/BCC Trade Confidence Index (TCI) has seen the total volume of export trade documentation slightly decrease, although it remains at historically high levels. With Britain’s economy growing steadily over the past few months, improved trading conditions have presented a great opportunity for British businesses of all sizes to expand internationally.

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

-30

-20

-10

0

10

20

30

40

50

60

70

80

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

Con�dence levels

• Confidence levels fell amongst exporters over the past three months. Manufacturing firms are noticeably less confident than they were in Q2 that their turnover will increase over the next year. Service firms are also less confident, but they still return a very high figure by historical levels.

EXPORT INDEX OVER THE PAST YEAR (2007 = 100)

Q3 13 Q4 13 Q1 14 Q2 14 Q3 14

116.32 112.69 117.03 119.27 116.93

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

Q3 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

• There was a fall in the volume of trade documents issued in Q3 2014.

• The index number reflecting the volume of trade documents issued by Chambers of Commerce across the UK stood at 116.93 in Q3 2014.

Percentage Change (%)

Index number 2007=100

Recent quarter compared to last year

Recent quarter compared to previous

quarter

Volume indexof

exportdocumentation

116.93 0.5% -1.9%

-15

-10

-5

0

5

10

15

20

25

30

35

40

Quarter on a year earlier

Qtr on Qtr

N IrelandWalesN EastS WestE MidsW MidsEastY&HScotlandN WestS EastLondon

% c

hang

e

Regional comparison - export index

% change in documents issued by Chamber

National

There was a fall in the volume of trade documents issued on the quarter. The index stood at 116.93 in Q3 2014. This represents a decrease of 1.9% on Q2 2014, and an increase of 0.5% on the same quarter in 2013. The highest out-turn on record was 119.27 in Q2 2014.

Regions and Nations

The results were mixed across the regions and nations of the UK in Q3 2014. The highest increase was recorded in Wales (+6.8%). This was followed by Scotland (+6.1%) and Yorkshire & the Humber (+1.6%). The South West (-13.7%) and Northern Ireland (-6.7%) saw a negative change in volumes.

Q3 2014

6

Export and confidence balances

Export orders balance falls sharply

• The export order balance decreased by 28

points in the third quarter of 2014. It is now +13%,

the lowest since Q4 2011. The lowest figure on

record was -36% in Q1 2009.

• Further breakdown of the export orders

balance shows that 25% of exporters reported

that export orders increased in Q3 2014. While 11%

of respondents stated that they decreased, and

64% stated that orders remained constant.

-40

-30

-20

-10

0

10

20

30

40


----Recession----

Balance of �rms reporting an increase in export orders

% b

alan

ce

Export Orders

50

Export orders

-40

-30

-20

-10

0

10

20

30

40


----Recession----

Balance of �rms reporting an increase in export sales

% b

alan

ce

Export Sales

50

Export sales

Export sales indicator also falls by a large

margin

• The export sales balance decreased by 22

points in the third quarter of 2014 to +19%. This is

the lowest since Q4 2011. The lowest figure on

record was -27% in Q1 2009.

• Further breakdown of the export sales balance

shows that 29% of exporters reported

increasedexport orders in Q3 2014, 10% of

respondents stated that they decreased, and 61%

stated that orders remained constant.

10

20

30

40

50

60

70

80


----Recession----

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

% o

f �rm

s

Pro�tability

Profitability confidence

The balance of firms who expect profitability to

improve remains steady

• Exporters’ confidence that their profitability will

improve over the next twelve months remained

high by historical standards. For the third quarter

of 2014 the balance of firms that expect their

profitability to improve increased, from +49% to

+50%.

• Further breakdown reveals that 59% expect

profitability will increase, 32% of firms reported

they expect no change in profitability and 9%

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 global economy continues to show a few signs of strength amid several signs of weakness. The greatest strength appears to be in the US economy, which may finally be on a sustainable and healthy growth path. Europe continues to struggle and the deceleration of growth in China continues amid concerns about the stability of credit markets. Emerging markets are mostly struggling that have caused a marked slowdown in growth, although India appears to be rebounding to some extent.

UK The UK economy grew by 0.7% in the third quarter of 2014, lower than the growth of 0.9% recorded in the previous quarter. In annual terms, the UK economy grew by 3% in Q3 2014 compared to Q3 2013. UK economic output is now estimated to be 3.4% higher than its pre-recession peak in Q1 2008. Although output rose in all four main industrial groupings within the UK economy in the third quarter of 2014, the service sector remains the key driver of economic growth.

TradeGlobal The volume of world merchandise trade continued to climb slowly in the opening months of 2014, with an increase of 2.1% in the first quarter compared with the same period in 2013. The increase for the year as a whole is expected to be greater than in 2013 as the global economy picks up momentum.

UK The UK’s trade deficit narrowed in August 2014 to £1.9 billion, from £3.1 billion in July. There was a deficit of £9.1 billion on goods, largely offset by an estimated surplus of £7.2 billion on services. However, this narrowing in the trade deficit was driven by imports falling at a faster rate than the decline in exports. Although exports fell by £0.7 billion to £23.2 billion, the lowest since 2010, imports fell by £2.0 billion over the same period, the largest monthly drop since 2006.

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 4.2% and imports by 3.7%.

UK EXPORTS

+1.9%

BCC forecast

Outlook

EconomyAlthough the prospects for 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, China in particular, is expected to be a little weaker than in recent years.

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

UK The BCC forecasts that the UK’s real net trade deficit will fall from 1.3% of GDP in 2013 to 0.7% in 2016. The BCC expects gradual medium-term progress in reducing the trade deficit, driven by a higher services surplus.

Q3 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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9

Q1 Q2 Q3 Q4

Kenya Taiwan Hungary Japan

Ghana Cambodia Slovakia Philippines

Kuwait Mozambique Kazakhstan Algeria

Morocco Chile Myanmar 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

9

10

Brazil has a mixed economy with abundant natural resources. The Brazilian economy is predicted to become one of the five largest in the world in the decades to come. In the last 15 years, the country has pursued a strategy of export-led growth and regional integration. The economy is relatively well diversified with a strong manufacturing and agricultural base. But economic activity is still concentrated in the southeast, particularly in the state of São Paulo.

Source: Oxford Economics

Economic snapshot (% annual growth rate)

Brazil’s economy, according to government figures, contracted by 0.6% in the April-June period, marking the second consecutive quarter of negative GDP growth and meeting the technical definition of a recession. However the government expects the economy to grow 0.9% this year, while the Central Bank sees GDP expanding at a 0.6%. Brazil’s economy grew just 1% in 2012 and expanded 2.3% last year.

Economic outlook

Latin America, China and Europe are Brazil’s top exporters over the medium term. However, Brazil exports to Europe are set to decline in the medium term, while exports destined for Asia and the US continue to increase as a share of total exports. Trade with Asia (excluding Japan) already accounts for more than a quarter of Brazil’s merchandise exports. The continued rapid industrialisation of these Asian economies is expected to drive further demand for raw materials from Brazil in coming years. China and Vietnam will be the fastest-growing export destinations over this period.

Trade outlook

Brazil

StrengthsWorld’s sixth largest economy. Large population.

WeaknessesIncome inequality. Excessive bureaucracy.

Opportunities2016 Olympics. Growing middle class.

ThreatsExport dependency. High interest rates.

SWOT analysis

Capital: Brasília Largest city: Sao Paulo Administrative divisions: 26 States Currency: Riel (KHR) Area: 8,514,877 km2 Population: (2013) 193,946,886 Calling code: +55 Official languages: Portuguese

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

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

8DOCUMENTS

£1415DAYS

17

2012 2013 2014-17

GDP 1.0 2.5 1.7

Export of goods and services 0.5 2.5 5.1

Import of goods and services 0.2 8.3 4.3

Inflation 5.4 6.2 6.1

Exchange Rate (Per £) 3.23 3.50 4.01

Population 0.9 0.9 0.8

11

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

UK Asia North America Europe

0

1

2

3

4

5

6

% o

f to

tal exp

ort

s in

to B

razil

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

Food, beverages & tobacco

Crude materials & fuel

Chemicals and related products

Manufactured goods

Machinery and transport equipment

Commodities

(Total value £1968m)

Sectors to watch:

• Financial and business services • Manufacturing • Public services

Sector segmentation growth

Agriculture, forestry & fisheries

Construction

Financial & business services

Industrial production, excluding construction

Information & communications

Manufacturing

Public services

Retails & wholesale distribution

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

5% 3%

45%31%

16%

6%

16%

23%

4%

17%

5%

16%

13%

Source: Oxford EconomicsSource: Eurostat



DHL Express Customs Top Tips:

Brazil

De minimus value (duty free allowance) = USD 3000. Shipments with a value over 3000 USD must enter the country as a formal shipment.

A Tax ID is mandatory for all non-document shipments and full consignee information must be included on the Waybill.

Foodstu�s imported into Brazil require inspection by the Brazilian Health Ministry and paperwork must be provided by the consignee. The import of milk from China is prohibited and salami, cheese, ham, eggs, �sh, crustaceans and lacteal products in general cannot be sent to individuals.

Opportunities for UK businesses Certain sectors of the Brazilian market have experienced higher than average growth, such as air transportation, telecoms, oil and gas, and mining. Under the second phase of the Growth Acceleration Programme the Government will be spending to develop the country’s energy generation and infrastructure. Other promising areas for UK companies include construction, aerospace and aviation, electrical power, safety and security devices, environmental technologies, retail, and transportation.

12

Myanmar

Capital: Naypyidaw Largest city: Yangon (Rangoon) Administrative divisions: 7 states and 7 regions Currency: Kyat (K) (MMK) Area: 676,578 km2 Population: (2014) 51,419,420 Calling code: +95 Official language: Burmese

Myanmar is a resource-rich country but still suffers from pervasive government controls, inefficient economic policies, corruption, and rural poverty. Myanmar is the poorest country in Southeast Asia; approximately 32% of the population lives in poverty. Myanmar has all the elements required to create another Asian economic miracle. With a population of 51 million, the country has a large pool of low-cost workers to attract the labour-intensive manufacturing that jump-started income growth from South Korea to Malaysia. Its strategic position located between China and India could turn Myanmar into a prime location for tapping into the growth of those two Asian giants.


Economic outlook Myanmar’s GDP grew 7.3% in 2013, and the pace is expected to quicken to 7.4% in 2014—the fastest in Southeast Asia. The growth is projected to be driven faster-than-expected economic activities and reforms. Substantial increase in exports, investments in major projects, primarily energy and infrastructure, and government spending are likely to remain the key drivers of the growth. The outlook remains positive in the short to medium term, the economy is projected to grow at 6.9% over 2014-17. Continued strong growth will be on account of a continued increase in gas production, increased trade, and stronger performance in agriculture.

Trade outlook Natural gas production, which accounts for nearly 41% of exports, will likely be the foremost growth driver. Gas exports to China and Thailand could rise significantly as two major offshore gas fields become operational. Imports are rising due to trade liberalisation and to support investment-driven capital goods demand. Myanmar’s major trading partners currently are Thailand, Singapore, China, India, Malaysia, Japan and South Korea.

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


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27

StrengthsLarge youthful population—providing an attractive labour force for foreign investment.

WeaknessesPoor infrastructure.

OpportunitiesStrategic geographic location between the region’s emerging giants and able to benefit from Asia’s integration.

ThreatsConcerns over political stability.


SWOT analysis

2012 2013 2014-17

GDP 7.3 7.5 7.3




Exchange Rate (Per £) 1349 1389 1483


13

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


0.0

0.3

0.6

0.9

1.2

1.5

% o

f tot

al e

xpor

ts in

to M

yanm

ar

Opportunities for UK businesses As one of the least developed countries in Asia, Myanmar has market opportunities in nearly every sector, including: infrastructure, transportation, telecommunications, agriculture, natural resources, professional services and manufacturing. British businesses specialising in construction equipment, resource extraction, refining facilities, power generation, renewable energy, processed foods, textiles and medical equipment will find export potential in Myanmar.




Manufactured goods


Commodities

(Total value £20m)

12%

10%

18%

57%

3%

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

Sectors to watch:

• Financial and business services • Retail • Manufacturing

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




Construction




Manufacturing

Public services


4%

18%

28%3%

8%

5%

23%

11%


Myanmar (Burma)

De minimus value (duty free allowance) = USD 500. However, this is a guideline only as all shipments are taxable.

No clearance paperwork is required for any shipments under the guideline de minimus value as they will be cleared informally.

For shipments that exceed the guideline limit, the consignee must hold a valid license and prepare all relevant documents for customs clearance. These shipments are subject to an additional delay of 2 - 14 days.

14

Hungary

Capital: Budapest Largest city: Budapest Administrative divisions: 19 counties Currency: Forint (HUF) Area: 93,030 km2 Population: (2014) 9,877,365 Calling code: +36 Official language: Hungarian

The economy of Hungary is a medium-sized, high-income and open economy. Hungary is a member of the Organisation for Economic Co-operation and Development (OECD) since 1995, a member of the World Trade Organization (WTO) since 1996, and a member of the European Union since 2004. The service sector accounts for over 60% of GDP and its role in the Hungarian economy is steadily growing due to constant investments into transport and other services in the last 15 years. Located in the heart of Central-Europe, Hungary’s location plays a significant role in the rise of the service sector as the country’s central position makes it suitable to invest.



Economic outlook Hungary’s annual economic growth was the fastest among the 28 European Union member states in the second quarter of 2014. Hungary’s economy grew by an annual 3.9% in the second quarter. Growth is now more balanced. With this growth rate the budget deficit can be kept below 3% of GDP. Household consumption grew by 2.4%, which was the highest growth registered in the past eight years. GDP growth has been raised to 3.3% this year, reflecting historical revisions to growth. This would be the economy’s best performance since 2006.

Trade outlook Hungary’s largest trading partners include Germany, Russia, the UK and France. Trade relations with Japan have been growing as Hungary sought Japanese capital and technology and hoped to gain a share of the Japanese market as that country opened its doors to foreign trade. Trade with China has also been increasing with the share of exports from China increasing to over 8% of total exports into Hungary. The share of UK exports to Hungary is expected to decline as the rest of Asia continues to increase its prominence within Hungary.

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


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StrengthsWell-qualified labour force.

WeaknessesCorruption.

OpportunitiesLocated in the heart of Central-Europe.

ThreatsHungary is very dependent on credit from abroad, especially credit provided by Eurozone banks

SWOT analysis

2012 2013 2014-17

GDP -1.7 1.2 2.4


Import of goods and services -0.1 5.3 6.5



Population -0.3 -0.1 -0.2

15

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


0.0

0.2

0.4

0.6

0.8

1.0

% o

f to

tal exp

ort

s in

to H

un

gary

3%

41%

19%

5%

32%

3%

24%

5%

15% 18%

21%

9% 5%

Opportunities for UK businesses With a population of over 9 million, Hungary is a strong location for foreign direct investment, and home to a strong domestic corporate sector. With an extensive road and railway network and skilled workforce the country is an ideal place for British companies to set up a branch serving as a gateway to the East. UK businesses can seek opportunity in the following sectors: electronics, engineering, software and life sciences. Opportunities exist also in tourism, transport, retail, food, environment and construction.

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

Sectors to watch:

• Financial & business services • Retail • Manufacturing

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




Construction




Manufacturing

Public services





Manufactured goods


Commodities



Hungary

Trading with the European Union is a simple process due to the free trade agreement that allows goods to cross country borders without charges being applied. Hungary’s status as the fastest growing economy in Europe, and forthcoming investment in infrastructure and energy e�ciency, mean it is a market that should be considered by UK businesses.

16

Kazakhstan

Capital: Astana Largest city: Almaty Administrative divisions: 14 regions Currency: Tenge (KZT) Area: 2,724,900 km2 Population: (2014) 17,948,816 Calling code: +7 Official language: Kazakh

Kazakhstan is an upper-middle-income country. Strong domestic demand, coupled with increased oil output and recovered crop production has boosted economic growth. An expansion of credit was the key driver of growth in private consumption and investment activity in 2013. Prospects of additional oil output coming on stream should help boost economic activity in the coming years and increase Kazakhstan’s vulnerability to external shocks unless the country succeeds in diversifying from natural resources to stronger institutions and higher quality human capital.



Economic outlook Economic growth in Kazakhstan slowed to 3.9% in the first half of 2014, the slowest rate since 2009, from 5.1% in the same period of 2013. The 19% devaluation of the Kazakh tenge in February 2014 depressed services, while industrial output fell by 0.4%, reflecting a decline in oil production and slowdown in manufacturing. However, agriculture expanded by 3.3%, and construction by 4.2%, benefiting from ongoing government support. Higher investment, improved consumer sentiment, and government stimulus are expected to accelerate growth in the second half of 2014 and into 2015.

Trade outlook Kazakhstan’s top foreign trading partners are the EU, China, Russia, Ukraine and Turkey. Kazakhstan’s principal imports include machinery and equipment (30.9% of total exports), ground transportation vehicles, aircrafts (14.9%), non-precious metals (12.2%), chemicals and allied products (9.3%). Principal exported items included mineral products (78.2% of total exports), non-precious metals (11.7%), products of vegetable origin (3.0%), chemicals and allied products (2.8%) and others (4.3%).

Importing a standard container of goods into Kazakhstan requires

Ease of trading across borders


12DOCUMENTS

£2977DAYS

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StrengthsStable economy. Strong regulatory environment for businesses.

WeaknessesCorruption Heavy regulation with regard to tax, obtaining credit and registering property.

OpportunitiesGateway to Russian and Belarus markets through Customs Union agreement. Wide range of opportunities as economy diversifies.

ThreatsEconomy over reliant on the extractive sector.

SWOT analysis

2012 2013 2014-17

GDP 5.1 6.0 5.2

Export of goods and services 2.0 -4.0 2.5





17

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


0.0

0.2

0.4

0.6

0.8

1.0

% o

f tot

al e

xpor

ts in

to K

azak

hsta

n




Manufactured goods


Commodities



Construction


Industrial production excl. construction


Manufacturing

Public services

Retail & wholesale distribution

37%

14%

48%

1%

Opportunities for UK businesses Kazakhstan is located right in the heart of Eurasia. Kazakhstan will be hosting Expo 2017 - a large trade exhibition held in varying parts of the world. With this many opportunities arise as a result of the expected projects which include: construction of Expo City and the green village, development of ‘Smart Astana’ using the latest technology in urban planning, infrastructure, healthcare, education, safety and ecology, transport infrastructure upgrade projects, design, engineering, consultancy services. Planned investments in the power, transport, communications and agricultural sectors should offer significant opportunities for UK companies.

How UK exports to Kazahstan compareKazakhstan’s trade with the UK UK exports to Kazakhstan (2013) - by major product groups

Sectors to watch:

• Financial and business services • Retail • Manufacturing

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



4%

18%

28%3%

8%

5%

23%

11%


Kazakhstan

De minimus value (duty free allowance) = USD 240. Subject to formal customs clearance.

Commercial documents for purchase or sale cannot be sent as documents. Shipments must be sent as non-documents and be accompanied by an Invoice.

Fabrics, fabric samples and leather goods require a Compliance Certi�cate for Customs clearance.

18

Slovakia

Capital: Bratislava Largest city: Bratislava Administrative divisions: 8 regions Currency: Euro (€) (EUR) Area: 49,035 km2 Population: (2012) 5,410,836 Calling code: +421 Official language: Slovak

The Slovak economy is considered an advanced economy, with the country dubbed the “Tatra Tiger”. Slovakia transformed from a centrally planned economy to a market-driven economy. Slovakia adopted the Euro currency on 1 January 2009 as the 16th member of the Eurozone. Slovakia is an attractive country for foreign investors mainly because of its low wages, low tax rates and well educated labour force. In recent years, Slovakia has been pursuing a policy of encouraging foreign investment.

Economic outlook GDP grew by 0.4% in Q4 2013, with growth driven by both net trade and domestic demand as consumer and business confidence improved significantly in Q4. Growth should accelerate further in 2014, helped by the gradual pick-up in foreign demand. However, a weak labour market will remain a drag on growth this year as unemployment is expected to decline only modestly this year.

Trade outlook Foreign trade is important to Slovakia’s economy. Crude oil, natural gas, machinery, and transportation equipment are Slovakia’s main imports. Exports include machinery, chemicals, fuels, steel, and weapons. The Czech Republic, Austria, Germany, and Russia are Slovakia’s leading trade partners. The upward trend in import business was stimulated by increased deliveries for the automobile industry as well as the electronic home entertainment sector, along with growing purchases of crude oil.

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

7DOCUMENTS

£927DAYS

17

StrengthsPolitical and economic stability. Skilled and inexpensive labour.

WeaknessesExternal demand largely from the Eurozone.

OpportunitiesSlovakia’s strategic geographical location - major European transit corridors, connecting the Western and Eastern parts of Europe.

ThreatsHousing market bubble. High number of foreign owned banks.




SWOT analysis

2012 2013 2014-17

GDP 1.8 0.9 3.2




Exchange Rate (Per £) 2.08 2.05 1.80


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2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

UK Asia North AmericaEurope

0.0

0.2

0.4

0.6

0.8

1.0

% o

f to

tal exp

ort

s in

to S

lovakia




Manufactured goods


Commodities


Sectors to watch:

• Financial and business services • Public services • Retail

19%

33%

4%

44%

24%

4%

7%

16%

21%

10%

16%2%

Opportunities for UK businesses Slovakia is a country of 5.4 million strategically located at the geographic heart of Europe. Slovakia’s stable macroeconomic policies have made it a good place for UK exporters to do business. Slovakia is relatively open and highly dependent on economic developments in the European Union. The Slovak economy is dominated by the automotive sector, which indirectly contributed about 26% of national income in 2013. Best prospects for UK businesses include: machinery, medical equipment, automotive parts and components, chemical products and plastics.

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

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

Source: Eurostat Source: Oxford Economics



Construction




Manufacturing

Public services



Slovakia

Slovakia is a member of the European Union so goods can be sent directly from the UK (or any EU member country) without Customs charges being applied. Slovakia’s political and economic stability, geographical location as a Central European hub (with 350 million potential customers within a 1,000km radius of the country’s capital) combine to make it a country with lots of opportunities for British businesses.

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Tanzania

Capital: Dodoma Largest city: Dar es Salaam Administrative divisions: 30 regions Currency: Tanzanian shilling (TZS) Area: 945,203 km2

Population: (2012) 44,400,000 Calling code: +255 Official languages: Swahili, English

Tanzania is a lower-middle income, small-sized economy located in Sub-Saharan Africa. Tanzania’s economy is predominantly services-based. Tanzania’s economy depends on agriculture, which accounts for more than one-quarter of GDP, provides 85% of exports, and employs about 80% of the work force. The World Bank, the IMF, and bilateral donors have provided funds to rehabilitate Tanzania’s ageing economic infrastructure, including rail and port infrastructure that are important trade links for inland countries.



Economic outlook Tanzania’s economy has been growing steadily for the past 10 years. Tanzania continues to do well in maintaining overall macroeconomic stability. The main drivers of growth have been agriculture, manufacturing, wholesale and retail trade, transport and communication activities. The economy has also continued to record strong export growth. Tanzania’s medium-term growth prospects are around 7%.

Trade outlook Tanzania, a member of the East African Community (EAC), mainly exports agricultural products to Europe, however the share of exports to Europe are expected to fall in the medium to long-term. The share of exports to the Asia are expected to increase, with the likes of India and China particularly experiencing a greater increase in share of imports from Tanzania. Tanzania’s major imports include machinery and technical equipment from Europe. The largest trading partners are China, Japan, India, Germany, UAE.

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


10DOCUMENTS

£941DAYS

31

StrengthsOne of the top destinations for foreign direct investment in Africa.

WeaknessesHeavily dependent on foreign aid. Corruption.

OpportunitiesGovernment continuing to pursue strategic reform goals.

ThreatsWeakness in infrastructure, in particular energy and transportation.

SWOT analysis

2012 2013 2014-17

GDP 6.9 7.0 6.8






21

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020


0.0

0.3

0.6

0.9

1.2

1.5

% o

f to

tal exp

ort

s in

to T

an

zan

ia




Manufactured goods


Commodities


4%5%

3%

72%

15%

1%

Opportunities for UK businesses Tanzania is located on the east coast of Africa, bordered by eight countries including Kenya, Uganda, Congo and Mozambique. The economy is relatively diversified and a number of opportunities remain untapped in many sectors, thus offer a wide range of opportunities to UK businesses. In order to achieve the Government of Tanzania’s goal of becoming a middle income country by 2025, Tanzania will need to restructure its economy which is currently agriculture-based. Opportunities exist in the following sectors: infrastructure, telecommunications, manufacturing and construction.

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

Sectors to watch:

• Information and communications • Financial and business services • Retail

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




Construction




Manufacturing

Public services


2%

21%

5%

15%

25%

15%

13% 4%


Tanzania

De minimus value (duty free allowance) = USD 3.

Shipments over 5000 USD are subject to Destination Inspection (DIS) with an inspection fee of 1.2%

All importers, including companies and individuals must be registered with the Tanzania Revenue Authority and be issued with a Taxpayer Identi�cation Number (TIN).

22

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*

22

Source: European Commission

23

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

23

Case study: ‘Our export journey’

Accredited Chambers of Commerce are Britain’s export hubs and 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.

24

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.

Ryan Pasco and James Taylor of Bristol founded AngelBerry in September 2011. The idea of frozen yogurt came from Ryans Californian road trip in July, 2011, when Ryan noticed a popular trend of self serve frozen yogurt stores, busy early till late with a wide variety of customers enjoying their guilt free indulgence.

Trading internationallyThe frozen yogurt retailer has just two UK stores – one in Bristol where it was founded. There are currently 6 international stores across the UAE, Mauritius and South Africa.

The franchising model has helped the business expand into warmer climates where frozen products sell well all year round.

The company now has deals in place for 80 stores across the Gulf States by 2018, with the second UAE store opening in November 2014.

In South Africa there will be a second store opening in Johannesburg by the end of 2014, and a deal with a cinema chain to roll out a kiosk version. There are a number of potential deals in the pipeline, with further expansion into Europe and Asia planned in 2015.

Member of Business West

Exporting tipJames Taylor and Ryan Pasco, co-founders: “We both took a trip the US of A to research every aspect of the frozen yogurt business, consuming over 50 pots of frozen yogurt in a two-day period. This trip gave us invaluable insight into how the US market is growing and operating as well as the conclusion that you should never eat 50 pots of froyo in 2 days!”

“It’s essential to carry out thorough research before you start exporting. It will help prevent costly mistakes, boost your chances of choosing the right market and show you how to sell your products and services in that market.”

“Without proper guidance and assistance, however, this process can be time consuming and costly — particularly for a small business, which is why we would recommend joining your local Chamber.”

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.

AngelBerry

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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)

26

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 25 August to 15 September 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

Documents

BBC QITO Q3 2014 - Full Report