If only we had their problems. Lesser-developed countries around the world are seeing so much growth that policymakers are worried about another global crisis.
The U.S. Federal Reserve’s Open Market Committee completed its two-day meeting this week and said our economy continues to strengthen, but that we are not out of the woods. The committee said high unemployment is holding back consumer spending, which makes up more than two-thirds of the US economy. To encourage more borrowing and spending the Fed is holding interest rates low for what it calls "an extended period."
The economic outlook is much better across the globe, and activity is picking up faster than many expected. Last July we saw financial markets in emerging countries bounce back to pre-crisis levels. At that time, the Brazilian stock market had returned to the same level it was at in fall 2008, and the Indian market was already 25 percent higher.
Since then the Brazilian market has risen another 40 percent, and India stocks have risen another 32 percent. Policymakers in China and both these countries are raising interest rates and restricting lending to slow inflation and protect against new financial bubbles.
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Brazil’s Central Bank is expected to raise bank-lending rates to more than 11 percent. India’s Finance Minister, Pranab Mukherjee, said this week “the government has utmost concern about the current price situation.”
As reported in The Wall Street Journal this week, Brazil's economy is estimated to be growing currently at an annual rate of 10 percent, and foreign direct investment into the country reached more than $26 billion over the past 12 months.
The International Monetary Fund released its World Economic Outlook on April 21. The IMF forecasts a respectful growth rate of 2.3 percent in advanced economies like the United States, but sees almost three times as much growth in the economies of emerging and developing countries. Brazil is forecast to grow at 5.5 percent for all of 2010.
The growing wealth of these markets is something to cheer and not, as some writers suggest, fear. These countries are the engines of future growth for the world economy and expanding opportunity for Idaho companies.
In February, the Idaho Department of Commerce released the state’s export data for 2009. Export sales by Idaho companies were 5 percent higher in the fourth quarter of 2009 over the same quarter of 2008, totaling $1.12 billion.
In 2009 Idaho saw export gains in precious metals, mineral concentrates and poultry products . Idaho now exports products to 150 countries. To encourage this trading activity, the Idaho Department of Commerce has offices in Taiwan, Mexico and China.
Idaho companies are likely to find weak demand here at home as the state remains mired in high unemployment. Although the state unemployment rate fell in March for the first time in more than two and half years, at 9.4 percent it is still well above long term averages.
The Department of Commerce could support Idaho companies with new offices or contacts in the many countries around the globe experiencing robust economic growth.
As Yogi Berra explained so well for us, “The future ain't what it used to be.” We must look past our home markets and see the economic future beyond our borders.
Peter R. Crabb is a professor of finance and economics at Northwest Nazarene University in Nampa. He earned his doctorate in international and financial economics from the University of Oregon.