3rd Quarter 2015

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International Trade Report

by Steven G. Livingston | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
Third-quarter state exports fell 2.2 percent but fared much better than the nation's.

The slowing global economy has proved too fierce a headwind for Tennessee exporters. Third-quarter exports fell 2.2 percent in value, to $8.057 billion. The good news, if you wish to call it that, is state exporters still fared much better than their national counterparts. Total American exports fell by somewhat more than 8 percent for the quarter.

Three regions accounted for most of the decline. China, whose economic slowdown has been big news for months, purchased $563 million in Tennessee goods for the quarter, a fall of more than $50 million from a year ago. This 9 percent drop was concentrated in motor vehicle sales along with exports of artificial filament tow, cotton, and medical instruments. Not every export sector suffered, however. State exports of computers and car engines were both up solidly. However, there is no getting around the negative impact of China’s slowing growth on Tennessee exports.

The second difficult region was in many ways a consequence of China’s reduced growth. State shipments to South America fell by almost 16 percent for the quarter. This steep decline is in large part the result of the falling global commodity prices that have so reduced the earnings of many Latin American nations. Brazil, the largest market, dropped 19 percent, while exports to Argentina were off by almost a third and to Colombia by 38 percent. These losses were concentrated in the aircraft, automotive engine, and chemical sectors. Venezuela was actually one of the worst global markets for Tennessee exports, as shipments to that nation fell from $21 million to $5 million. This, however, was more due to the economic meltdown in that nation than to anything going on in China. Once again, there were bright spots. Chile was up strongly, as state export grew by $33 million (to $125 million). Chile, by the way, has become by far the second-largest South American market for state exporters.

The third problem area was our neighbor to the north, Canada. The reason was not all that different from these two other regions. The drop in commodity prices, the ensuing recession, and the fall of the Canadian dollar are eating into Canadians’ purchasing power. As a result, in spite of a modest increase in automotive exports, Tennessee’s shipments to Canada fell by a bit over 6 percent, to $2.048 billion. No single product was particularly responsible for this drop, though laptops, car engines, and heaters all dropped by $10 million or more. For the past several quarters, we have noted this Canadian slowdown. Mexico had been riding to the rescue, allowing overall Tennessee exports to the NAFTA market to keep growing. But this quarter the gains in Mexico were more modest, about 2 percent, not enough to overcome the losses in Canada.