4th Quarter 2015

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It doesn't seem very plausible that Tennessee businesses will be able to turn a somewhat somber export picture around anytime soon.


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Looking at exports regionally, the biggest disappointments have to be in our neighboring markets. If exports to Canada had only matched last year's performance, state exporters would have broken even for the fourth quarter. Both auto industry and computer industry exports lost ground north of the border. Shipments to Mexico also fell, though not as much. Aircraft exports, along with car engines, were the major factors behind a $100 million quarterly loss in Mexico.
Europe was the site of the biggest gains for Tennessee exporters in the fourth quarter, perhaps because it was one of the few areas were the dollar was not getting stronger. Led by a $250 million gain in shipments to the Benelux countries, state exports to the EU rose from $978 million to $1.166 billion. The U.K. market was similarly strong, as state exports there gained over 10 percent in the quarter. The world's other large developed market, Japan, performed even better, in percentage terms. Led by those electric battery shipments, Tennessee's exports to Japan grew by nearly $100 million (almost 20 percent). The state's sales to Australia were also up by 10 percent.

Outside the developed world, however, things were tough going indeed. The troubles of China and the rest of the developing world clearly show up in the export statistics. Tennessee's shipments to China were down 12 percent (a loss of $67 million). The smaller Middle East market posted losses of $83 million, almost one-quarter of its Tennessee shipments of last year. Exports to Latin America were also down substantially with only Chile and Peru, among the markets of any size, bucking the tide. Shipments to Russia all but collapsed, with Tennessee exports falling from $93 million to $23 million for the quarter. The bright spot among the emerging markets, if you can call it that, was Southeast Asia, where state exports fell “only” $5 million.

An oddity for the quarter is that almost all of the state's best markets were in the Baltic region. However, that turned out to be merely a coincidence, since although all of the nations bought a lot more of Tennessee's goods, for each it was a different good.

It doesn't seem very plausible that Tennessee businesses will be able to turn a somewhat somber export picture around anytime soon. Besides the headwind of the dramatically lowered growth in most regions of the world, exporters face the problem of the extremely strong American dollar in Canada, by far the state's largest export market. Until at least one of these two trends changes, increasing global sales will be an uphill battle for many Tennessee businesses.