TFR's Cross-Border Trade Forum & Awards

Dr Rebecca Harding, Co-founder and CEO, Equant Analytics

Key indicators, challenges and strategies driving trade finance

About the Speaker

Dr Rebecca Harding, Co-founder and CEO, Equant Analytics

Dr Rebecca Harding is the co-founder and CEO of Equant-Analytics and the Chief Economist of the British Bankers Association. She is a technology entrepreneur and has also held senior roles in business, academic institutions internationally. These include founder and CEO of Delta Economics, Senior Fellow at London Business School, CEO of the Global Entrepreneurship Monitor worldwide, Head of Corporate Research at Deloitte and Chief Economist at the Work Foundation. In her early career she was a Senior Lecturer at the Science Policy Research Unit, Sussex University and a Reader in Economics at the University of Brighton. She was a Specialist Adviser to the Treasury Select Committee and Chief Economic Advisor to the All Party Parliamentary Group on Entrepreneurship. She has published 8 books and over 200 articles and reports. Rebecca is a Director of the German British Forum, a Fellow of the Royal Academy of Arts, an Academician for the Academy of Learned Societies for the Social Sciences and a member of the Society of Business Economists.

Dr. Rebecca HardingCEOrh@equant-analytics.com

TFR Conference, March 9th 2017

Trade, Risk and Politics – the outlook for 2017

4

G20 trade outlook, 2016-17Is trade becoming political?

-4.1

-0.1

-2.5

-0.6

-1.7

0.9

-0.7 -0.7

0.5

1.9

-0.5

1.8

0.3

0.7

1.2

2.9

1.8

-1.4

4.5

-0.5

3.3

-2.9

-2.5-2.1

-1.2 -1.2-1.0

-0.6-0.4 -0.2

0.2 0.2 0.30.3 0.6 0.6

1.3 1.31.6

2.4

4.4 4.5

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

Fore

cast

20

16

-17

ch

ange

(%

)

Change in Imports 2016-17 Change in exports, 2016-17

5

Slowing trade growthThe reason for economic nationalism?

0

0.5

1

1.5

2

2.5

3

3.5

4

2012 2013 2014 2015 2016

Trade and GDP growth 2012-2016 (forecast)

World trade growth GDP growth (volumes)

Globalisation (last 5-10 years) Economic nationalism (last 18 months)

Trade Wars

• Globalisation

• Integration

• Opportunities

• Development

• Wealth

• Technology

• Performance and productivity

• Inclusion

• Barriers

• Costs

• War (currency or trade)

• Walls

• Campaign

• Retreat

• Defence

• Protect

• National interests

Is trade being weaponised?

7

Oil and commodity rally short-livedHow long will the trade finance optimism last?

-2.23-1.69

-0.13

0.29

1.31 1.521.93

2.983.58

7.44

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

20

16

-17

pro

ject

ed g

row

th (

%)

8

UK – trade with global regionsAnnualised projected growth 2016-20)

2.9

2.02.4

-1.1

-2.0

4.2

-0.6

0.9

-0.6 -0.6 -0.6

0.1

7.4

-0.2

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

MENA EU27 Euro_Currency North_America South_America APTA Sub-Saharan Africa

An

nu

alis

ed p

roje

cted

gro

wth

, 20

16

-20

20

(%

)

CAGR 2016-2020 Imports CAGR 2016-20, exports

9

UK top sector tradeTop 12 export sectors (ranked by size left to right)

-0.3

2.5

5.5

3.0

8.8

1.5

6.5

3.1

-3.0

2.8

0.9

2.9

4.4

0.0

2.2

-2.2

2.8

-2.6

3.7

1.8

-0.6

0.51.2

4.1

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

Preciousmetals

Computersand

machinery

Automotives Oil and gas Pharma Electronicsand

electricalequipment

Aerospace PrecisionEquipment

Organicchemicals.

Plastics andarticlesthereof.

Beverages Works of art,collectors'pieces andantiques.

An

nu

alis

ed p

roje

cted

gro

wth

, 20

16

-20

(%

)

CAGR 2016-20, imports CAGR 2016-20 exports

10

UK Service trade

2.6

-1.1

1.4

0.8 0.8

2.0

0.0

2.6

1.6

4.1

0.1

4.0

1.3

2.2

-1.4-1.1 -1.0

0.8 0.81.0

2.6 2.6 2.6 2.7 2.83.3 3.4 3.5

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

CA

GR

, 20

16

-20

(%

)

CAGR 2016-20, Imports CAGR 2016-2020, Exports

11

US trade with top partners and regionsProjected growth to 2020

4.9 4.8

1.4

2.0

1.1

3.6 3.5

-1.0

4.8

1.6

2.7

5.4

-1.0 -0.9

1.8

4.3

1.6

-0.8

2.5

1.6

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Asia-Pacific China EU27 Eurozone Canada Mexico Germany Japan South Korea UK

Pro

ject

ed a

nn

ual

ised

gro

wth

to

20

20

(%

)

Annualised growth in imports (%) Annualised growth in exports (%)

12

US trade with China, 2016The product of 20 years of globalisation

0

20

40

60

80

100

120

140

Electricalequipment

Computers andmachinery

Furniture & softfurnishing

Toys, games &sports equipment

Clothing Aerospace Automotives Oil seed

Val

ue

of

US

trad

e w

ith

Ch

ina,

20

16

(U

SD b

n)

Imports, 2016 Exports, 2016

13

Trump and Mexico: annual growth to 2020Oil or jobs?

2.8

4.3

6.0

-4.1

5.6

3.93.5

1.8

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

Electrical eqiupment Computing and machinery Automotives Oil and gas

Pro

ject

ed a

nn

ual

gro

wth

to

20

20

(%

)

Annualised import growth, 2015-2020 *%) Annualised Export growth, 2015-2020 (%)

14

Trump and Mexico: annual growth to 2020Oil or jobs?

5.6

3.93.5

1.8

2.8

4.3

6.0

-4.1

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

Electrical eqiupment Computing and machinery Automotives Oil and gas

An

nu

alis

ed g

row

th, 2

01

5-2

0 (

%)

Annualised Export growth, 2015-2020 (%) Annualised import growth, 2015-2020 *%)

15

Stability in the Middle East?Sanctions and Turkey as the conduit

0

2E+09

4E+09

6E+09

8E+09

1E+10

1.2E+10

1.4E+10

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Val

ue

of

Turk

ey's

exp

ort

s (U

SD)

Iraq Russian Federation United Arab Emirates Iran Saudi Arabia

16

China’s top ten trade routes with JapanVictim of the South China Seas or demand-led policy?

3 3

-0.6

-2.3

1.3

0.2

-2.7

-3.1

-0.7

-1.5

-4

-3

-2

-1

0

1

2

3

4

Electricalequipment(Exports)

Electricalequipment(Imports)

Computers andmachinery(Exports)

Computers andmachinery(Imports)

Precisionequipment(Imports)

Cars (Imports) Knitwear(Exports)

Plasticproducts(Imports)

Organicchemicals(Imports)

Iron and steel(Imports)

Top

ten

sec

tor

Ch

ina-

Jap

an t

rad

e co

rrid

or

(ch

ange

20

16

-1

7, %

)

17

North Korea: not as isolated as may appear

0

50

100

150

200

250

300

350

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Nuclear-related imports Aerospace and propulsion Imports

18

Conclusion: Trade Wars & Currency Wars

• What weapons do they have?– Are inflation targets the right metric?

– Does the Balance of Payments matter any more?

– Will interest rates really rise?

– Where does all the liquidity go?

– And what happens if the Dollar strengthens?

• What do central bankers want – only they know….

• …. But they should not ignore the seismic shifts in trade!

Are central bankers the new Generals?

Thank You

Legal Disclaimer:

Legal Disclaimer

Equant Analytics Ltd is a private limited company registered in the UK at Companies House, No 0955476.

Any data or information provided in this presentation is for illustrative purposes only and does not represent investment advice or recommendation. All efforts are made to ensure that data and information are accurate and reliable at the time of delivery. Any divergence of the data from other publicly available sources or from material available on Equant Analytics data platforms is due to rounding or use of alternative methodologies. These are made explicit in the text.