NI exporters feeling the chill from slowdown in China
Northern Ireland exporters have said they are feeling increasingly nervous as the slowdown in China threatens the global economic recovery and the stability of export markets.
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Yesterday, the FTSE 100 Index equalled its worst one-day fall since the financial crisis, as it plunged by nearly 5%.
London’s top-flight was more than 6%, or 400 points, lower during the session as contagion from China’s growth slowdown spread across the globe.
China's central bank devalued its currency, the yuan, two weeks ago, making its exports cheaper and imports more expensive.
The FTSE pared back some of the losses later but still closed down by 4.7%, or 288.8 points, a loss of £74bn from the value of its constituent companies and equalling a 4.7% drop seen in September 2011.
The figures took the market into territory last seen in the dark days of the downturn.
Northern Ireland manufacturers which export to China and which have a strong interest in its economy include Wrightbus in Ballymena, dairy giant Dale Farm and medical diagnostics firm Randox.
But exporters expressed concern that other markets will be caught up in China's problems.
PwC chief economist Esmond Birnie said Chinese sales were probably around £90m out of total manufacturing exports of about £6bn ever year.
Jonathan Dobbin, regional director for Barclays Wealth and Investment Management in Northern Ireland, said firms, including those from Northern Ireland, had long been encouraged to export to China "to lessen reliance on the sluggish European economies".
"China was the sixth-largest destination for British exports last year. China will remain a vast market - but it may not be quite such a one-way bet as some analysts have in the past suggested."
Wayne Horwood of corporate finance and business advisory firm HNH said China's problems could have an even bigger impact than other economic concerns including fears over a potential British exit from the EU and the Greek crisis.
"What we are seeing is the knock on effect of China on global commodity prices, stock markets, fx markets and interest rates.
"Manufacturing and infrastructure is where Chinese spend will suffer due to over stocking."
But he predicted a crash in China would not be as damaging as the 2008 crisis. "But it will mean an economy of nearly 1.5bn people is left permanently smaller than it otherwise would have been - probably a much weaker market for western goods, and a less prosperous world in general."
Alistair Bann of Marlborough Engineering said global market collapses could have an impact on the firm's exports - especially to the US. The Belfast-based firm - which produces aircraft components as well as jigs and fixtures - relies on between 40 to 60% of sales to the US.
As well as the FTSE's 4.7% fall yesterday, the Dow Jones plummeted more than 1,000 points.
Ashley Pigott, managing director of AJ Power, which produces diesel generators, said exports had been hit considerably over the last six months. The Craigavon company currently sells to markets in South America and Africa as well as Northern Europe and the Middle East.
"In the longer term you have had the euro strengthening like mad. And when you look across the world, currencies are weakening - it's not just the eurozone.
"We would do more business in other countries in the Far East. The real issue comes down to the longer haul - is there still the confidence for people to invest?"