Credit Management June 2019

INTERNATIONAL
TRADE
Monthly round-up of the latest stories
in global trade by Andrea Kirkby.
RUSSIAN STAGNATION
IT'S been a while since I covered
Russia but things don't feel as
if they've moved on much. Q1
shows GDP growth slowing from 2.7
percent in the last quarter of 2018 to
0.8 percent year-on-year, and growth
prospects for the medium term are
only modest. While GDP is still ahead,
real disposable incomes are falling,
and this, together with a population
that's declining by a quarter of a
million a year, will keep the consumer
market subdued.
The structure of exports has hardly
changed over the last decade; oil and
gas accounts for 60 percent and other
commodities have a big impact, too.
No wonder the ruble has halved in
value over the last ten years.
The good points? Russia is
relatively protected from external
shocks by high reserves and low
external debt.
It's a hard market to make money
in – particularly if you don't keep an
eye on DSOs, because enforcement is
an absolute nightmare. But firms in
engineering, pharma, and chemicals
have done well there – and British
brands and education are well
regarded in Russia. You might make
it work – but make sure you have the
right payment terms and watch that
currency, too.
THE BIG SWITCH
EULER Hermes' recent study 'The Big Switch'
makes for interesting reading. Euler Hermes
identifies three things that are changing
this year. Firstly, China replacing the US as
a source of global growth; secondly, a switch
from a trade war to new pragmatism; and
thirdly, a move away from recent hawkishness
on the part of central banks, leading to further
economic stimulus.
Although President Trump talks a good
fight, the US is now a highly indebted economy
with a disorderly budget setting process, and
Euler Hermes thinks the investment cycle
is stalling. That will affect growth in 2020
onwards. On the other hand, China is now
taking actions to stimulate the economy, and
could see improvement from Q2 this year.
That will help the Asian economies which are
highly integrated into Chinese supply chains.
Moving to trade pragmatism and away from
protectionism will help export orientated
economies. In Europe, Germany will benefit
from this trend – so will highly export focused
Asian economies like Vietnam.
Monetary dovishness, on the other hand,
should help emerging markets. Euler Hermes
looks for countries which have introduced
economic reforms, which are exporters, or
do well from China or all three: Ivory Coast,
Kenya, South Korea, Taiwan and Hong Kong
are the top picks.
It's an interesting argument. I'm not
completely sure things will work out as
expected, but I might run the slide rule over
a couple of those countries to see how the
fundamentals stack up.
EXPORTING IS NOT
GREAT AT ALL
I took a trip to export.great.gov.uk and Global
Britain turns out to be rather a bust, to judge
from this website. There are only five country
guides available at the moment, and there
seems to be less really crunchy information
than there used to be. For instance, you're told
that Brazil ‘has complex import regulations’
and the site suggests you can go somewhere
else to find out about them.
Meanwhile looking at the legacy pages on
gov.uk – ‘exporting to India’ was last updated
in November 2016 – as were a lot of the other
pages. There's very little really up-to-date
information.
The message I'm getting? ‘Exporting
is something we can spare a junior civil
servant a few hours a week to work on.’
Nice rebranding – but you're better going to
credit insurance companies or a Chamber of
Commerce to get the facts.
The Recognised Standard / www.cicm.com / June 2019 / PAGE 28