Irish exporters trading with Russia may be counting the cost of sanctions, while those hoping for a reopening of some African markets may have seen their hopes dashed by Islamic State and its affiliates. Others, such as those dependent on China, may have lost out as the market slowed down.
For some now may seem like a good time to step back and consolidate. Last year, Irish businesses ramped up the value of goods exported to the EU by more than 40 per cent. This level of demand may not continue, but the EU offers tremendous opportunities.
The US Federal Reserve move in December to increase interest rates for the first time in almost a decade has exacerbated the euro’s decline against the dollar giving euro zone exporters an added competitive edge.
Asian markets will offer plenty of opportunities – and not just China, which is still showing strong growth. India, which is now growing faster than China, Vietnam and Indonesia are seeing rapid expansion of their economies and the spending power of their populations.
Of the world’s top 30 economies, we expect those in Asia, the Middle East and Africa to increase about fourfold by 2050, driven by demographics and urbanisation. That would make these regional economies larger than those of Europe and the US combined. We expect Asia alone to contribute nearly 50 per cent of global GDP growth between now and 2050.
Hugely exciting
As those economies grow, so their demand for goods and services from Europe is likely to increase. China is a case in point and remains a hugely exciting, if challenging, market. There the demand for sophisticated software and financial services is growing (services exports from Ireland exceeded goods to China last year) and consumer spending on healthy food and other quality staples is rising.
It is all part of the orientation of the West towards the East. As Asian economies increasingly rebalance away from exporting and towards importing, the scale of the opportunity for Irish businesses will increase.
Tapping into new and established trade corridors with Asia and other markets presents great opportunities for Irish businesses. The Government's recent release of the Enterprise 2025 policy document gives a clear mandate to Enterprise Ireland and Bord Bia to support geographic market diversification, including to high-growth emerging markets, so that exports to non-UK markets increase by 50 per cent.
Main trends
Some of the main trends expected to be a key part of Irish exporters’ strategies this year are: - Niche specialist companies that collaborate with other best-in-class organisations to compete internationally; - More small players competing globally;
- Mobile technology and use of social media databanks enabling easier access to consumers and businesses internationally;
- Understanding future demands on the planet and what consumers (government, business and individuals) want to create businesses based on fulfilling goals sustainably;
- Operating models based on leasing rather than purchasing. New models for cash-flow generation are fundamentally shifting the ability of companies to operate internationally, scale and grow;
- Using data to track global demand, particularly evolving consumer demands, is a major trend.
Potential risks that could affect trade include: national security risks; terrorism; cyber security; pandemics; geopolitical uncertainty and instability (in such countries as Syria, Russia, Ukraine, Turkey and Libya) and economic crises such as the risk of recession in Brazil and South Africa, slower growth in China, Brexit, deflation in Europe and countries returning to protectionism.
John Whelan is export sector specialist with AIB and the former chief executive of the Irish Exporters' Association
