NEW TRADE FORECASTS show growth in exports to Asia will support an overall increased performance from Ireland with China overtaking France and Japan to become the country’s fourth largest export destination by 2030.
Although Ireland’s main export markets of the UK, USA and Germany will remain the top three destinations, the main growth areas for its exports lie in emerging Asia, according to HSBC’s latest Global Connections trade forecast. This is evidenced by forecasted growth in exports to China of 11 per cent per annum in the period 2016-2030.
Alongside China, the forecasts also show India and Vietnam as the fastest-growing export markets to 2030, with Malaysia and Indonesia also becoming increasingly important.
Managing Director and Ireland Head of HSBC Alan Duffy said emerging markets are “developing at a phenomenal pace and are set to reshape world trade patterns over the next 20 years”. He said understanding which sectors are growing allows businesses to plan ahead and capitalise on trends.
For example, a shift towards the production of higher-value goods, particularly evident in Asia, means that developed nations will also need to evolve the goods they export, operating increasingly at the higher-end of sectors. This means that Ireland’s export prospects depend to a large degree on the inward investment in pharmaceutical and chemical manufacturing and hi-tech sectors that have driven rapid growth in the past as well as increasing sophistication from Ireland’s home-grown exporters.
Ireland’s overall export performance is expected to be relatively favourable compared to its Western European peers. Growth in merchandise exports from Ireland is, for example is forecast to outstrip the UK, France and Germany in the period 2021-2030.
Exports to the main markets in Europe (excluding Russia) are forecast to grow by about 3 per cent per year in 2013-15, but should then pick up to about 4 per cent in 2016-20. Exports to Asia (excluding Japan) and North America are also expected to accelerate in 2016-20, reflecting the pace of demand in key emerging markets and a gradual strengthening in prospects for the US.
As well as the main emerging markets in Asia, export markets such as Turkey and some in the Middle East will also grow strongly in the period ahead, including the United Arab Emirates, to which Irish exports are forecast to grow 11 per cent per annum in 2013-15 and then some 7-8 per cent per year in 2016-30. Exports to Saudi Arabia and Egypt are seen growing by 8 per cent per annum in 2021-30.
Ireland’s main export strength in the coming years will be in chemicals, pharmaceuticals, scientific apparatus and ICT equipment. Chemical exports are forecast to contribute over 30 per cent to the increase in total exports throughout the entire forecast period, while the contribution from pharmaceuticals to the increase in exports will rise from 26 per cent in 2013-15 to 30 per cent in 2016-20 and then to 34 per cent in 2020-30, overtaking chemicals. Shipments of scientific apparatus will contribute around 6-7 per cent to the rise in total exports in the period 2013-30.
In China, export growth in Information & Communications Technology and Industrial Machinery gathers pace. This balances a declining rate of growth in sectors such as Textiles, giving rise to opportunities for companies in the smaller, faster growing countries around the region to win contracts to produce these more basic goods.
Other countries making the move up the supply chain are Malaysia and Argentina. Malaysia’s top exportable goods will shift from lower-value sectors such as Animals and Vegetable Oils to higher-end industrial machinery, which will make the largest contribution to Malaysia’s export growth by 2030. Argentina’s top export sectors will change from Animal Products to Transport Equipment and Industrial Machinery.
You can read the whole forecast here.