This week’s blog looks at the recent data concerning Welsh exports and asks to what extent this indicates that the Welsh economy has become more export oriented and focused on the faster growing markets of the World economy.
Previous Centre for Enterprise blogs have discussed the need for the Welsh economy to become more export oriented, given the current UK economic situation and the government’s fiscal austerity policies. The need to look beyond the EU for markets, especially given the Euro currency crisis has also been highlighted.
The recent news concerning Wales’s export performance is therefore heartening. It does, however, depend on which sets of figures you choose to focus on.
On the postive side, Wales’s exports in the first quarter were up marginally, whilst they fell in the other nations of the UK. Indeed, since 1999 Wales’s exports have more than doubled, a much greater increase than the UK average of 71%.
Also, Wales was one of the few parts of the UK that has a trade surplus with the rest of the (non UK) world, exports exceeding imports. Also encouraging is the fact that nearly 60% of Wales’s exports now go to markets outside the EU, indicating a more diversified market focus.
Whilst the EU markets of Ireland, Germany, and the Netherlands remain important, the USA now takes 25% of Welsh exports and the United Arab Emirates has also become important. All of this would, therefore, suggest a postive outlook for Welsh exports.
On the negative side, however, over the last year Wales has seen a smaller rise in exports than the UK as a whole. Possibly related to this, is a perceived lack of focus on the fastest growing markets of the world and a continuing reliance on a relatively small number of products.
For example, whilst Welsh exports to Brazil have seen a marked increase in the past year, the calls continue for a greater focus on the largest and fastest growing markets of China and India. In addition, Wales’s exports are concentrated in only four industries namely energy, engineering, metals and chemicals.
Whilst these sectors are forecast to continue to grow in the next few years, in Wales the exports from theses industries are also dominated by a small number of large companies, particularly Tata, Airbus and Dow Corning. Whilst the latest statistics are therefore, on the whole, good news for the Welsh economy, the need to diversify the export base in terms of markets and number sof firms is still of paramount importance.
For this reason the fact that the number of exporting firms rose by a greater percentage in the last year in Wales than any other part of the UK is encouraging. In addition, the First Minister’s trade missions to India and China as well as the USA highlight at least a realisation of the issues that face Welsh exporters.
The diversification of Wales’s exports in terms of products (with sectors such as mobile computing and communications highlighted as an area of potential) is also, however, of vital importance. In addition, the need to link innovation (both firm specific and linked to other stakeholders such as universities), supply chain, and SME export promotion policy strategies to generate a widening of both the product and firm export base will continue to grow over the next few years.
In conclusion, therefore, whilst there are encouraging signs from the broad statistics, there continues to be a need to focus on this vital area of economic development policy.