On several occasions since World War II, and currently, the U.S. economic locomotive has been instrumental in pulling the rest of the world out of periods of poor economic growth. As this occurs, global markets improve, creating new opportunities for traders and investors. Today, new opportunities are emerging in Europe, Latin America and Asia, as well as risks that may affect your company’s bottom line.

European Union Expansion Underway

European Union (EU) accession negotiations are underway to grant 13 countries membership. This could boost the EU population to 545 million consumers with tremendous purchasing power. But determining how to make future decisions that don’t undermine control of the current 15-member body could become divisive. Overall, the growing trade bloc and its single currency, the euro, are likely to challenge future U.S. interests.

Germany: The EU Giant

Germany, which accounts for approximately one-third of Euroland’s GDP, is the U.S.’ largest EU trading partner. U.S. exports in 2001 worth $30 billion and imports of $59 billion were slightly lower than 2000’s figures. Sound German prospects for exports and investment include computers, peripherals and software, management consulting services, telecommunication and medical equipment, and electronic components.

German private consumption is expected to remain weak; construction is projected to continue in recession, and investment in machinery and equipment should gain momentum. Overall, German GDP growth estimated at 0.7% in 2001, is projected at 0.4% in 2002 and 2.7% in 2003.

U.K. Trade Impacted by the Euro

In 2001, U.K. exports to and imports from the U.S., each approximately $41 billion, were slightly less than in 2000. Importantly, both countries remain each other’s largest investor. Top U.K. export and investment opportunities include aircraft, defense equipment, water resource equipment, apparel, and education services.

The U.K high-tech industry was disproportionately impacted by softer world demand and the strength of the pound against the euro resulted in lower U.K. exports. U.K. GDP growth estimated at 2.4% in 2001, is projected to dip to 1.6% in 2002 and resume stronger growth of 3% in 2003.

Russian Growth Is Back on Track

Russia’s transition from a centrally planned economy to a free market partly resulted in a 45% decrease of GDP growth between 1990 and 1998. The result: one-third of Russia’s population fell into poverty by 1999. A briefly interrupted recovery that began in 1997 is now back on track. Growth, estimated to have reached 5.2% in 2001, should slow to 3% in 2002 and rise to 3.8% in 2003. Although Russia’s per capita income has slipped to $2,245, Putin administration reforms are generally supported by the public.

Frequent changes in Russian customs regulations and enforcement have created problems for U.S. exporters, who face tariffs of 5% to 35% plus a value added tax of 20%. However, many problems may dissipate as Russia negotiates terms of a future accession to the WTO.

U.S. exports of $3 billion and imports of $6 billion were impacted by both a stronger ruble and stronger Russian demand. Export and investment opportunities in Russia include aircraft, pharmaceuticals, oil and gas, and telecommunication equipment.

Canadian Trade Is Larger than EU Trade

U.S. merchandise trade with Canada in 2001, which included U.S. exports of $164 billion and imports of $217 billion, was higher than U.S.-EU. trade. Uplifted by NAFTA, Canada’s economy mirrors the U.S. economy at about a 10% ratio.

Trade disputes continue over softwood lumber, agricultural goods and safeguards applied to Canadian cultural industries. An exceptionally weak Canadian dollar also has been cause for concern. Nevertheless, Canada’s GDP growth, which was estimated at 0.9% in 2001, is projected to rise to 1.5% in 2002 and 3% in 2003.

The sectors providing the best prospects for exports and investment include automotive parts, electronic components, computers, peripherals and software, aircraft and parts, and building products.

Mexico Is Poised for Growth

With the exception of Argentina, major Latin American economies are expected to perform well. Lower financing costs, higher commodity prices and improved U.S. growth contribute to the region’s GDP growth projections of 2.2% in 2002 and 3.9% in 2003.

Bolstered by NAFTA, Mexico’s GDP growth is projected to rise from -0.2% in 2001 to 2% in 2002 and 4.6% by 2003. Although its per capita GDP income is $6,077, Mexican domestic consumption of U.S. goods is tremendous. This is partly due to the high premium placed on U.S. goods. In 2001, U.S. exports of $102 billion and imports of $131 billion resulted in Mexico, again, ranking as the U.S.’ second largest trading partner.

The best prospects for trade and investment include automotive parts and supplies, electronic components, computers, software and services, and telecommunications equipment and services.

Brazil Contemplates an FTAA

Brazil, the world’s ninth largest economy, is actively assisting the failing Argentine economy, partly to stabilize Mercosur, the regional trade bloc, and to strengthen its position against the U.S. in negotiations to establish the Free Trade Area of the Americas.

Brazil’s estimated GDP growth rate of 1.5% in 2001, is expected to increase to 1.7% in 2002 and 3.6% in 2003. The country’s GDP per capita rate is expected to slightly decrease to $2,600 in 2002. The impact of Brazil’s energy crisis on industry was less than feared.

In 2001, U.S. exports to Brazil reached $15.9 billion, while U.S. imports rose to $14.5 billion. Top prospects for trade and investment include electronic components, telecommunications, oil and gasfield machinery and services, and computers, peripherals and software.

Japan’s Economic Outlook Is Poor

Most Asian Pacific economies are forecast to grow in 2002. However, soft IT world demand will keep Asian Pacific expansion relatively limited.

Even prior to September 11th, the Japanese economy entered a new period of weakness. A global slowdown in high-tech demand, compounded by deflation, has contributed to Japan’s poor estimated GDP growth rates of -1.3% in 2001, -0.5% in 2002 and -0.2% in 2003.

Although the Japanese economy remains weak, Japan continues to be the U.S.’ third largest trading partner. Thus, U.S. exports to and imports from Japan were $57.6 billion and $126.6 billion in 2001. Top prospects for U.S. exports and investment include electronic components, computers, peripherals and software, telecommunications equipment, and automobiles and parts.

Korean Prospects Appear Bright

Although Korean GDP per capita is forecast at $9,127 in 2002, U.S. exports there in 2001 were $22.2 billion and imports were $35.2 billion. Korea’s GDP growth rate was estimated at 2.5% in 2001, and is anticipated to rise to 3.8% in 2002 and 4% in 2003.

Top prospects for trade and investment include broadcasting, pollution control, safety and security equipment, computer software, and aircraft and parts.

Continually Reassess Target Markets

Due to continually changing circumstances, it’s necessary to frequently reassess the performance of target markets. For more information and assistance on individual countries, visit www.doc.gov.

This article appeared in March 2002. (BA)

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the ManzellaReport.com, is a world-recognized speaker, author and nationally syndicated columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

More Articles | Speaker Programs | Speaker Demo | Videos | Services

You don't have permission to view or post comments.

Quick Search

Stock Watch

FREE Impact Analysis

Get an inside perspective and stay on top of the most important issues in today's Global Economic Arena. Subscribe to The Manzella Report's FREE Impact Analysis Newsletter today!