Exports - the light at the end of the tunnel?
In a recent McKinsey Quarterly article "Working out of Debt" authors Croxson, Lund, and Roxburgh of the McKinsey Global Institute revisit the progress toward deleveraging/recovery from 2008. They compare the progress of the US compared to other markets.
As part of a lengthy look at where we are currently and how we might divine where we are headed, they offer 5 diagnostics which might provide clues. Of potential import for the readers of this blog, #3 on the list is "Have exports surged?" They provide some historical examples where growth in exports has foretold recovery and then go on to say:
Even if exports alone cannot spur a broad recovery, they will be important contributors to economic growth in today’s deleveraging economies. In this fragile environment, policy makers must resist protectionism. Bilateral trade agreements, such as those recently passed by the United States, can help. Salvaging what we can from the Doha round of trade talks will be important. Service exports, including the “hidden” ones that foreign students and tourists generate, can be a key component of export growth in the United Kingdom and the United States.
No single data point identifies a trend. But it's pretty important to understand the huge impact that exports can have on a national economy.
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