Weakening world demand hits N.H. exporters
In its latest annual report on global development finance, the World Bank provides evidence that developing countries “have become a driving force underlying the global trade.”
The report has found that during the 1990s the contribution of industrial countries to global imports declined to threefold relative to developing countries, from ninefold during the 1980s.
More important, the World Bank reveals that in the current decade, a “breakthrough” shift has occurred as “developing countries became larger contributors to global imports” in comparison to industrial countries.
Driven by developing countries’ demand, U.S. exports have become a key factor of production and jobs, thus keeping so far the domestic economy afloat from sinking into a recession.
In the latest quarterly report of U.S. GDP, the contribution of exports accounted for two-thirds of the growth in the U.S. economy, which grew at an anemic annual rate of 1 percent from the last quarter of 2007.
Using recent trade statistics for the country as whole, exports of goods rose by 0.7 percent in May to an all-time high of $110.8 billion, adjusted for seasonal variation. So far this year, exports of goods grew by an impressive annual rate of 18.4 percent from the same period a year ago.
For New Hampshire, in the first five months of the year, foreign sales from New Hampshire’s companies — seasonally adjusted — increased by an annual rate of 27.5 percent compared with the first five months in 2007.
In view of the year-to-date performance in foreign sales, New Hampshire ranked 14th among the 50 states in export growth.
Foreign sales of goods made in New Hampshire edged down in May by 8.7 percent, after an increase of 5 percent in April. New Hampshire’s exporters sold overseas $281.9 million in goods in May, adjusted for seasonal variation.
Compared with a year ago, New Hampshire’s exporting companies this May surpassed their export performance in May of 2007 by $42.6 million, or 17.8 percent.
New Hampshire’s overall exports in May reflected the mix of trends in foreigners’ demand for goods made by different industries. Overseas shipments from New Hampshire’s manufacturers — which accounted for 82 percent of all exports — decreased to $231.6 million, seasonally adjusted, 15.3 percent less than April’s level of factory shipments.
Exports of non-manufactured goods rose 41.9 percent in May to $50.4 million, adjusted for seasonal variation.
What is the outlook for growth in the world economy? The World Bank’s report predicts economic growth in the United States will decline from 2.2 percent in 2007 to 1.1 percent in 2008, significantly weaker than its December 2007 projection of 1.9 percent. Economic growth forecasts for Japan and the euro area for 2008 have also been revised downward to 1.4 percent and 1.7 percent, respectively. The bank forecasts economic growth for developing countries as a group to moderate from 7.8 percent in 2007 to a still strong 6.5 percent in 2008.
Important for New Hampshire’s exporting companies, the World Bank forecasts the volume of global trade to grow 4.5 percent in 2008 and 7.2 percent in 2009, compared with an increase of 7.5 percent last year.
Evangelos Simos, chief economist of the consulting and research firm Infometrica Inc., is international affairs editor of the Journal of Business Forecasting and professor at the University of New Hampshire. Distributed by Infometrica Inc. Dr. Simos may be reached at firstname.lastname@example.org.