Britain stands to boost its exports to Bangladesh as a non-member of the European Union (EU), a new study released in London today has found.
The ‘G7 to E7: The Standard Chartered Trade Performance Index’ analyses the trade potential offered by seven emerging (E7) economies of the world – Bangladesh, China, India, Indonesia, Nigeria, Pakistan and Vietnam, with Bangladesh offering a $0.3 billion additional post-Brexit export potential.
Under a “Notional Post-Brexit Exports” analysis, the research highlights that UK exports to Bangladesh stand at $0.2 billion, predicted to grow to $0.8 billion if it remains within the EU and to $1.1 billion as a non-member – marking an extra $0.3 billion.
The figures come as both sides prepare for their Second Bangladesh-UK Strategic Dialogue in London on Thursday, to be held between Bangladesh foreign secretary Md Shahidul Haque and Foreign and Commonwealth Office (FCO) Permanent Under-Secretary Sir Simon McDonald. Bilateral trade will take centre-stage against a backdrop of Brexit and Bangladesh on the road to move out of the bracket of the world’s low-income economies by 2024. During the first Strategic Dialogue held in Dhaka in April last year, both countries had agreed to work together on efforts to encourage more foreign direct investment (FDI) and trade.
The UK, as the second-largest foreign investor in Bangladesh, describes the country as a “long-standing friend” and will hope to tap into the additional post-Brexit export potential highlighted by the new research, which found that the UK has been found to be struggling the most as the world’s advanced economic powers try to strengthen trade links with the E7 countries.
“Membership of a trade and customs union may increase trade within that union but often diverts trade that might have happened outside it,” it notes.
Analysing overall trade with the E7 countries, which are home to almost half the world’s population, the new study found that Britain could export 43 per cent more than at present.
Meanwhile, the Bangladesh-Canada trade relationship was flagged as a success story within the index when compared to other economies of the G7 which include Germany, Canada, Japan, Italy, France, the US and the UK.
“Canada’s trade of retail links with Bangladesh is strong, with Bangladeshi imports of Canadian retail out-performing imports from the rest of the world by 65 per cent over the last five years. This trade route is an example of how to create effective E7 connections fuelled by long-term commitment and diverse commodities,” the report notes.
The Canada-Bangladesh trade route amounts to $650million, which is 80 per cent greater than the projections for the route.
The new Standard Chartered index, developed in partnership with independent macro analysis consultancy Oxford Analytica, found that G7 nations and companies were all under-performing in their export trade to the E7. Of the 49 trade routes between individual G7 and E7 countries, only nine currently exceed or meet expectations. The remaining 40 trade routes under-perform by a total of $162 billion against their export potential. This constitutes a 30 per cent annual growth opportunity for the G7 to the E7.
“The E7 represents a critical highway to future growth for the G7 in 2018 and beyond,” the study concludes.
Germany is singled out as the greatest G7 to E7 success story, which exceeded its total predicted value of trade with the E7 by exporting 109 billion USD, double what is predicted.
“It is clear the E7 represent multi-billion-dollar trading opportunities for G7 governments and businesses searching for export diversification and growth. Companies should develop sector-specific strategies and corridors, then identify how they can increase their opportunities there,” said Michael Vrontamitis, Head of Trade for Europe and Americas at Standard Chartered.