500 million consumers in expanded EU
THERE ARE many positives for SA exporters following the addition of 10 new members to the EU (see page 8).
“It will effectively be a bigger, seamless market for our exports,” Whitehouse & Associates’ Duncan Bonnett told FTW.
“According to the latest figures, SA currently has an export total of about R750-million to the 10 new member countries - about the same level as Sweden.”
However, according to EU figures, the expanded EU will become a market of close to 500-m people.
“These dynamics obviously provide good opportunities for SA companies able to take advantage of the new scenario.
“Studies by the EU estimate that expansion will add 1.3% to 2.1% to the gross domestic product (GDP) of the new members - and an estimated 0.7% to the existing members.
“This is good news for a sluggish EU economy - and also for those companies that trade into it.”
Theoretically, Bonnett added, income levels in the new EU member countries should rise as they are integrated into the union.
“And, as income levels rise, so will consumption levels - and there will be a steadily growing market eastwards across the European continent for companies to take advantage of.”
But it’s a case of SA exporters reacting swiftly if they wish to take advantage of this situation.
“Many of the companies in the new EU member countries are not globally competitive,” said Bonnett, “and it will obviously take time for them to adjust to new realities.
“Local companies already competing effectively in the EU should, therefore, also be able to expand successfully into these new markets.”
Bonnett highlights “the big three” amongst the new member countries - Poland, Hungary and the Czech Republic.
“These are the key new markets for SA exporters,” he said.
“With 60-m consumers between them, and a combined GDP of US$254-billion, they offer a sizeable addition to the potential market for exporters.”
It is also a new market area very similar in its import demand to Africa, according to Bonnet - and should be familiar to SA exporters.
“In many ways,” he said, “the export basket to these countries is closer to SA’s export basket to other African countries, than to the EU - which should bode well for local manufacturers.”
So, from May, SA companies will have preferential access to markets from the Atlantic to Eastern Europe, and Norway to the Mediterranean.
