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While technological improvements
and quality enhancements provide an advantage in selling goods abroad,
export success is still determined by how much money foreign buyers have and
how weak the dollar is against the buyers’ national currency.
Nevada exporters have found the dollar’s decline a welcome help against
foreign competitors and are pleased with its recent lows as a boost to
foreign demand for their products.
However, in addition to better competitive international prices, foreign
demand for domestic goods is chiefly determined by the ability of the
consumers to buy them, particularly the growth in foreigners’ income. For
instance, if Europe is in recession with high levels of unemployment,
European consumers will be unable to buy as many goods – foreign or domestic
–as before despite a decline in prices.
In its recent report, the Organization for Economic Cooperation and
Development (OECD), estimated that economic growth in the industrial
countries accelerated by an annual rate of 3.6 percent in 2004, up from 2.2
percent in 2003 and 1.6 percent in 2002. The Paris-based global economic
think tank also announced that global trade is estimated to have advanced by
an annual rate of 9.5 percent in 2004, about twice the rate of 2003.
As exporting companies sell most of their goods to consumers and companies
in the industrial countries, the strengthening of economic activity abroad
has made them feel a climb in global demand for their products.
Consequently, in the first ten months of this year, national exports of
goods, adjusted for seasonal variation, increased 13.6 percent from the same
period in 2003, which is nearly 4 percent higher than the growth in the
world’s trade volume.
The favorable foreign conditions have spread across the nation’s exporters
and have reached Nevada. During the January-October period, exports of goods
from the Silver State increased by an annual rate of 41.9 percent from the
same period of 2003, which is nearly three times faster than the national
average. Nevada ranked third in export growth among the fifty states so far
this year.
According to the recent international trade statistics, exports from
Nevada's companies pulled back 6.1 percent in October, following a surge of
22.8 percent in September. At their October mark, foreign sales registered
$262.1 million, seasonally adjusted, which is the second highest level on
record.
On an annual basis, state companies last October shipped abroad $68.1
million, or 35.1 percent, more goods than in October of 2003.
October’s export performance mostly reflected trends in manufactured goods
trade, which accounted for 77 percent of all sales abroad. Foreign shipments
from Nevada's factories went down in October by 11.3 percent from the
previous month to $200.7 million, adjusted for seasonal variation.
Exports of non-manufactured goods went up 16.4 percent in October to $61.4
million, also adjusted for seasonal variation. This group of shipments
abroad consists of agricultural goods, mining products, and re-exports which
are foreign goods that entered the state as imports and are exported in
substantially the same condition as when imported.
For the country as a whole, U.S. exports of goods, seasonally adjusted, rose
0.3 percent in October to $69.4 billion, an all-time record. The latest
increase in national exports was driven by record sales in industrial
supplies and materials. Also, exports of capital goods increased, while
consumer goods sales remained virtually unchanged.
What are the prospects for global economic growth next year which will
ultimately determine the demand for Nevada's foreign sales and
export-related jobs? In its twice-yearly outlook, OECD predicts solid growth
for its members, the club of the thirty richest nations.
The research organization forecasts 2.9 percent economic growth in 2005 and
3.1 percent in 2006. Most important, OECD predicts world trade to grow by 9
percent in 2005 and 9.5 percent in 2006. These growth rates are nearly three
times faster than the rate of overall economic growth, implying good export
opportunities for American companies doing business abroad.
The projections on global growth and trade suggest an increase in export
orders for Nevada companies. Driven by foreign demand, production activity
at the state level is expected to rise and, as a result, more export-related
jobs will be generated over the next two years.
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