Posted by Press Office in News | 23/04/2018

New research, commissioned by Alliance Finance Bank, reveals the UK’s fastest growing export partners are dominated by countries in Asia Pacific with three in the top five. Europe and the Middle East also rank with one each.

Exports to these five countries were worth US$71bn last year. The projected growth means that these markets could generate an extra US$2.1bn a year for US exports. 

Alliance Finance Bank, set up to help small and medium sized businesses, commissioned the research to better understand the role of imports and exports in the US economy. It was prepared in collaboration with Global Trade Review, the leading trade and trade finance media company, which has provided the data.

Regional growth from Asia Pac and South America

Regionally, Europe remains the UK’s biggest trading partner for exports with a 46.3% share. North America is next with 17.2%, while Asia Pacific (7%), Sub-Saharan Africa (5.4%), Mena (1.8%) and South America (1.2%) follow.

However, the fastest growing market is Asia Pacific, where exports are expected to grow at 3% a year to 2021. South America, where US exports are expected to grow by around 0.5% annually until 2021, is the second fastest growth region.

Iain Hunter, CEO of Alliance Finance Bank, said: “Behind these headline economic figures, trade is important because it creates jobs. It has helped to contribute to the UK’s record employment levels, providing financial security for millions of families up and down the country.

“However, in order for businesses to succeed, they need working capital. It is only by providing better access to funding that we can support businesses to trade, grow and create jobs.”

SMEs driving growth and innovation

The analysis also shows that more than twice the number of US small and medium sized enterprises (SMEs) trade internationally than government figures estimate.

Some 30% of SMEs trade internationally against just 12.9% according to a government survey in 2016.

Among SMEs, the sectors with the highest international turnovers are professional and business services at 26% and manufacturing at 24%. In addition, 10% of retail and wholesale SMEs have international turnovers, as well as 9% of ICT SMEs.

Iain Hunter added: “SMEs are vital to US trade because they are often ambitious and entrepreneurial. In addition, they are also a vital source of innovation. Smaller, more innovative companies – especially in manufacturing – play an important part in the UK’s capacity to form a crucial part of global supply chains.”

The US is one of the most open economies

Overall, the US economy is highly dependent on trade. It accounts for 58% of US GDP. This makes the US economy one of the most open in the G20, and more open than China, America and Japan. In 2016, the US exported goods worth US$433.5bn and imported goods worth US$678.1bn.

Hybrid “manufacturing as a service” emerging

The research also shows the emergence of a new hybrid category of goods and services: manufacturing as a service. This new sector is forecast to grow at 2.6% a year to 2021.

The research also shows that three key sectors will dominate US trade in goods, when assessed by the value of exports:

• Automotives at US$55bn now and expected to grow at 1.7% a year to 2021
• Pharmaceuticals at US$33bn now and expected to grow by 0.8% a year to 2021
• Aerospace at $21.5bn now and expected to grow by 3.7% a year to 2021

Meanwhile, two key sectors dominate both imports and exports for services:

• Business services imports and exports are worth US$113.6bn a year now and expected grow at 0.9% a year to 2021
• Financial services imports and exports are worth US$78.6bn a year now and expected to grow at 2.6% a year until 2021

About the research

The data provided here is publicly available from the United Nations, OECD and Eurostat, for every trading jurisdiction in the world.

It creates a consistent picture of trade globally.  It “mirrors” the trade flows. That is, it looks at trade between two country pairs and averages out the difference between the two reporting countries in favour of the better reporting country for each sector.

This is replicated for every country and every sector flow creating a trade database handling 3TB of data at anyone point in time.

The values are reported in US dollars to make comparisons consistent thus they will differ from those published by the US government. From 2017 onwards, the data is projected on the basis of trends in the data. There are no assumptions thus the results are entirely neutral.

References to SMEs are based on a definition of small and medium businesses as having up to 250 employees, turnovers of €50m or balance sheets of up to €43m.