Exports from Massachusetts to overseas markets rose during 2011, but the Eurozone debt crisis is likely to have a deleterious impact on the Bay State export economy in 2012.
Recently released year-end statistics reveal that the dollar value of products exported from Massachusetts increased 5.35 percent between December 2010 and December 2011. There’s little doubt that the figure would have been higher if not for world events—Japan’s earthquake, the European financial crisis—that put a damper on global trade.
Massachusetts and other states are still not back to export levels of the pre-recession days, though we will likely match and then exceed those totals during 2012.
What can we learn from this? Why does the European debt crisis matter? A group of about 250 Massachusetts global business executives recently met at the Global Business Alliance of New England (GBANE) annual forum to hear from Michael Goodman, Chair of the Department of Public Policy at UMass Dartmouth and member of the AIM Board of Economic Advisors, and Geoffrey Somes, Senior Economist, State Street Global Advisors.
Here’s the good news: Japan continues to recover from the earthquake, albeit slowly. Economic recovery in the United Kingdom is fragile but progressing, with recession being staved off and inflation being lowered. Emerging and developing markets will continue to be significant engines of growth, though at a deliberately slower pace than in recent years. And here in Massachusetts, businesses continue to invest in technology and equipment which that ultimately increase productivity and increase exports.
And the not-so-good news: Economic uncertainty continues in the Eurozone. With Europe a major destination for Massachusetts products, our export numbers will be affected. The US dollar is high and the Euro is declining, which also hurts US exports. Traditional and advanced markets are unlikely to experience high growth any time soon—their economic performance is “anemic.”
The fate of the economic recovery in the US and in Europe is largely in the hands of political leaders, which is not ideal because of the risk of political miscalculation.
What’s a Massachusetts company to do?
- Diversify your overseas markets.
- Continue to look to developing markets for growth opportunities.
- Do not abandon markets in Europe, but make sure you’ve identified and mitigated the risks for your business.
- Look closer to home and consider increasing your trade with Canada, which is the number one trading partner for Massachusetts and the U.S.