According to the latest numbers on global trade flows released by the World Trade Organization, in the first eight months of 2012 the value of world merchandise exports fell 0.4 percent to $10.7 trillion from the same period in 2011.
WTO’s trade figures on exports from January through August show that the United States ranked as the second-largest exporter in the world with foreign sales hitting $1.02 trillion, which was $54 billion, or 5.6 percent, more than during the first eight months of 2011.
China was the world’s leading exporter, selling abroad $1.31 trillion worth of exports so far this year. Germany, the export engine of the European Union, maintained its third place, posting $938 billion in foreign sales in 2012. Japan was ranked the world’s fourth-largest exporter, selling abroad $540 billion of merchandise this year. The four-country combined value of exports accounts for 36 percent of all exports in the world in the first eight months of 2012.
At the state level, the latest trade numbers show that shipments abroad from Michigan exporting companies dropped 4.1 percent in August, following a decrease of 9.6 percent in July. As a result, $4.55 billion worth of goods left Michigan going to international markets in August. The state trade figures are adjusted for seasonal variation to bring them in line with the national trade numbers.
On an annual basis, August’s numbers indicate exporters posted gains due to foreigners’ demand for goods made in Michigan. In August of this year, exporters sold $261.2 million, or 6.1 percent, more goods than in August of last year.
Manufactured goods, a primary contributor to the growth of international trade and important generator of local jobs, accounted for 86 percent of all state exports in August. Exports from state manufacturers decreased by 2.3 percent from the previous month to $3.9 billion, adjusted for seasonal variation.
How do Michigan manufacturers compare to their performance a year ago? August’s foreign shipments from state factories were $284.6 million, or 7.8 percent, higher than in August of last year.
Exports of non-manufactured goods went down 13.9 percent in August to $620.9 million, adjusted for seasonality. 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.
For the country as a whole, America’s exports of goods, seasonally adjusted, fell in August by 1.6 percent to $128.5 billion. The latest drop in merchandise exports reflected declines in industrial supplies and materials; foods, feeds and beverages; consumer goods; and automotive vehicles, parts and engines.
Looking at state export growth in 2012, a measure of the success that state companies achieve in increasing their market share into foreign markets, Michigan ranked 12th among states during the first eight months of this year. Compared to the same period in 2011, foreign sales from Michigan's companies, seasonally adjusted, increased by an annual rate of 11.4 percent. So far this year, national exports of goods rose 5.6 percent, which is the 50-state average growth rate.
What is the outlook for exports for the rest of the year and in 2013 for Michigan's companies? It depends mainly on foreign buyers’ finances, which are affected by economic growth in their countries. The faster the buyers' countries grow, the higher their demand for goods made in Michigan.
In its new semiannual World Economic Outlook published this month, the International Monetary Fund evaluated global economic conditions and provided evidence that “the world economic recovery continues, but it has weakened further.”
With respect to advanced economies like European countries, Japan and Canada, IMF assessed current economic growth to be “too low to make a substantial dent in unemployment.” In addition, for major emerging economies like China, India and Brazil, IMF sees their "(economic) growth, which had been strong earlier, has also decreased.”
Presenting IMF’s World Economic Outlook, Olivier Blanchard, IMF's director of research, said, “We are facing a very difficult situation in which the levels of debt are very high. These are levels of debt where things can go wrong very, very quickly.”
Given the risks for worldwide economic activity, IMF projects global growth to average 3.3 percent in 2012 following an increase of 3.8 percent in 2011 and 5.1 percent in 2010. In 2013, IMF predicts global economic growth to edge slightly higher than in 2012 to 3.6 percent, implying that next year the world economy will not be better off in comparison to 2011.
In the key export markets of the industrial economies that include European economies, Canada, Australia and Japan, IMF predicts economic growth to average 1.5 percent in 2013. However, IMF forecasts emerging and developing economies to grow by an average growth rate of 5.6 percent in 2013, about four times faster than the growth of the industrial countries.
More important for Michigan's exporters, the IMF predicts the volume of international trade to slow down relative to the last two years. The World Economic Outlook forecasts growth in worldwide trade to average 3.2 percent in 2012 and modestly accelerate to 4.5 percent in 2013. The worldwide trade forecasts compare unfavorably with actual global export growth rates of 12.6 percent in 2010 and 5.8 percent in 2011.
Accordingly, Michigan companies doing business abroad are expected to again see weak levels of export orders from their major foreign markets next year, especially from clients in industrial economies. Based on the IMF report, investments in marketing state exports to fast-growing emerging economies may help hedge against industrial countries’ weakening demand.
Evangelos Simos is chief economist of consulting and research firm e-forecasting.com. He may be reached at firstname.lastname@example.org.