(29 November 2012 – Sydney) Despite cheaper prices for offshore goods, Australian importers are anticipating solid growth in trade volumes and are planning to increase the price of their goods and services in the coming quarter. This is in direct contrast to exporters who, despite plans to cut their prices, continue to expect lower trade volumes.The results are included in the inaugural Citi Australian Trade Finance Index,
which surveyed 863 Australian businesses evenly spanning three business segments
– SME, corporate, and institutional – in October this year. The research,
conducted by East & Partners, looked at business sentiment and expectations over
the next quarter to January 31, 2013, and reveals the “bi-polar” impact that the
high Australian dollar is having on business.
The research found that:
-
Importers are forecasting a 6.2 percent increase
in their trading volumes in the coming quarter and are planning to raise their
prices by 4.4 percent -
Exporters, by contrast, were forecasting a 2.6
percent decline in forward volume, and were planning to reduce their pricing
by an average of 4.5 percent -
The pricing dichotomy was strongest in the
Consumer, Retail and Healthcare sector where importers were looking to
increase their prices by 6.1 percent and exporters reduce their’s by 8.5
percent -
Larger exporters – or those organisations with
annual turnovers of $500 million plus – were an exception to this trend, and
were looking for a 4.4 percent climb in volumes, even though they were also
planning to cut their prices – in their industry segment – by 3.2 percent - The Industrials, Metals and Mining sector constitutes the strongest
outlook growth for both export and import volumes, with an inverse result as
exporters forecast an 8.3 percent increase in volumes, with importers
forecasting a more modest 4.1 percent increase
“The results are a stark illustration of the bipolar impact of the high
dollar and the impact it is continuing to have on business,” said Ashley Bakes,
Senior Vice President of Treasury and Trade Solutions for Citi. “And while it is
logical for exporters to lower prices in order to make themselves competitive,
the intention for importers – who are already advantaged by the currency – to
increase prices is an insight.
“Perhaps they are playing catch-up after the global financial crisis, or see
that the market will tolerate price hikes, but either way it re-inforces the
fact that importers see themselves very much in a position of strength at the
moment.”
The research also underlined the increasing importance of the Chinese RMB to
exporters and importers, with forward RMB engagement growing at twice the rate
of $USD engagement.
This is particularly apparent among the larger institutional segment, where
respondents forecast an 18 percent rise in RMB engagement over the coming
quarter.
Also in strong demand is the New Zealand dollar, which posted the third largest
currency growth outlook, reflecting the strong growth in Trans-Tasman trade and
the renewed momentum for Australian corporate, especially manufacturers, to
re-invest in the lower cost Kiwi environment.
About the Citi Australian Trade Finance Index
Owners of the trade finance relationship in 863 corporates were interviewed
in October 2013, with majority of them either Corporate or Group Treasurers
(46.8 percent) or Trade Officers (40.9 percent). Of the sample, 31.1 percent
were from the SME segments (A$25-A$150 million annual turnover), 33.8 percent
were corporates (A$150-A$500 million) and 35.1 percent were institutions with
annual turnover of more than A$500 million. For a complete understanding of the
survey results, please refer to the full report. Citi is not responsible for any
losses arising from the usage of the information contained or extracted from the
report.
About Citi
Citi, the leading global bank, has approximately 200 million customer
accounts and does business in more than 160 countries and jurisdictions. Citi
provides consumers, corporations, governments and institutions with a broad
range of financial products and services, including consumer banking and credit,
corporate and investment banking, securities brokerage, transaction services,
and wealth management. In Australia, Citi serves over 1 million customer
accounts and 1,000 corporate accounts. It has the most comprehensive offering
and largest global reach of any bank with operations in Australia.
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About Citi Transaction Services
Citi Transaction Services, a division of Citi’s Institutional Clients Group,
offers integrated cash management, trade, and securities and fund services to
multinational corporations, financial institutions and public sector
organizations around the world. With a network that spans more than 95
countries, Citi’s Transaction Services supports over 65,000 clients. As of the
third quarter of 2012, it held on average $415 billion in liability balances and
$12.8 trillion in assets under custody.
About East & Partners
East & Partners is Asia-Pacific’s leading specialist business banking market
research and analysis firm. East & Partners delivers both bespoke and
multi-client research programs and consulting services to client banks and
financial services providers across the institutional, corporate, SME, business,
investment and financial services markets.
Media Contacts:
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Hong Kong:
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+852 2868 7682