Growth prospects in emerging markets

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Yesterday Maddie provided an overview of the results of the Executive survey 2013 along with commentary on how manufacturers expect key business indicators to turn out in 2013.

We now turn to markets and look at what are manufacturers expect to see in the overseas markets in which they are involved. Boosting trade is one of the key pillars of rebalancing and building a stronger UK economy. As manufacturers are export intensive, the growth potential in export markets plays a big role in the ability of manufacturers to achieve their business plans and strategic ambitions.

So what are companies planning for in overseas markets in 2013?

In a nutshell

  • Companies expect continued growth from emerging markets
  • In emerging markets, manufacturers have high involvement in Asia but low exposure to Africa and South America
  • The Eurozone market shows the only negative balance

While things remain dodgy in the Eurozone, Executives see opportunities for growth in other markets and particularly emerging markets. In the survey we asked companies that were exposed to a geographical market whether they were planning for growth, a stable market, or a decline. The chart on the left shows the proportion of companies with some exposure to the market and the chart to the right shows the outlook companies are planning for in the various markets.

Manufacturers involved in emerging markets, particularly Asia and South America, are the most positive and are expecting the outlook for 2013 in those markets to show strong growth. North America and the Middle East also show a significant group of companies expecting growth with only a small percentage expecting the markets to decline. The Eurozone is the only region with a negative balance – more respondents are planning for a decline than for growth in Eurozone markets. These expectations appear to align to a reasonable extent with our growth forecasts for these markets.

Looking at expectations for the market outlook alongside the level of exposure manufacturers have to those economies, we get a bit of a picture of the size of the opportunity for growth those markets afford UK manufacturers. Emerging markets provide the biggest opportunity, not only growth for those companies that are currently involved but also for manufacturers that currently have no exposure.

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