Washington Export Industry on Track for Record Breaking 2014, According to New Analysis by Beacon Economics; Chinese Demand For Aerospace Helping Drive Growth

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The value of exports from Washington State is on target to reach an all time high in 2014. Average annual growth of Washington exports is forecast to overtake the robust growth experienced in 2013, driving the total value of state exports to a record-breaking level.

Washington’s export growth has been relatively vigorous every year since the recession ended and the performance in the first half of 2014 has been true to trend, pushing export values into new territory.

The value of exports from Washington State is forecast to reach an all time high in 2014, according to an analysis released today by Beacon Economics. Average annual growth of the value of Washington exports is on track this year to overtake the robust growth experienced in 2013, driving the total value of state exports in 2014 to a record-breaking level, the analysis finds.

In the first two quarters of 2014 (January to June), the value of Washington’s exports totaled $43.2 billion, an 11.2% increase over the first half of 2013. This puts 2014 squarely on target to surpass the record value exports reached in 2013 and to beat last year’s 7.9% average annual growth, according to the analysis.

“Washington’s export growth has been relatively vigorous every year since the recession ended and the performance in the first half of 2014 has been true to trend, pushing export values into new territory,” says Beacon Economics’ Founding Partner Christopher Thornberg who co-authored the report with Beacon Economics’ Senior Research Associate Eric Meux.

Since the end of the recession in 2009, exports in the state have averaged 9.8% annual growth compared to just 4.3% prior to the recession (1997-2007). Since the recession first began in 2007, through 2013, Washington’s export value has averaged 7% annual growth.

According to the analysis, Washington’s export industry performed well during the recession compared to pre-recession years and compared to the nation overall, where exports only averaged 3% annual growth between 2007 and 2013. Washington’s stronger growth has increased the state’s share of total U.S. exports from 4.9% in 2007 to 5.2% in 2013.

The faster post-recession growth of Washington exports can be attributed primarily to strength in the state’s top commodities. “Washington exports a variety of products, but its biggest commodities have performed powerfully and consistently in recent years, leading to more rapid overall growth,” says Meux.

The state’s number one commodity, transportation equipment, specifically aerospace parts and products, accounted for 56% of the value of all Washington exports in 2013. Since 2008, the value of transportation equipment exports has averaged 7.2% annual growth. “Given that The Boeing Company is located in Washington, and that China’s demand for aircraft does not appear to be waning, exports of aerospace equipment should be a major factor in the state’s economy long into the future,” says Meux.

Based on current economic conditions, the report’s authors say the longer-term outlook for export trade in the state is strong. “We expect the growth trend in exports to continue,” says Thornberg. “The U.S. dollar is at close to a 20-year low and the global economy is regaining momentum – these are conditions that will fuel world demand for goods from Washington, which in turn will help drive the state’s economy.”

Export trade is an important engine of Washington’s overall economy, making up a very significant share of the state’s total economic output – 20% as of 2013, the analysis finds.

Additional key findings include:

  • In 2013 Washington’s merchandise export trade was valued at $81.6 billion—20% of the overall state economy. Among the 50 states, Washington currently ranks 2nd in terms of exports as a share of its economy.
  • In 1997 the value of exports to China represented 5.5% of Washington’s total exports; in 2013, that share jumped to 20.5%. Over the last ten years, the value of exports to China has grown 411% in nominal terms. From 2012 to 2013, the value of Washington’s exports to China increased by 18% compared to 11% in the nation as a whole.
  • In 2013, the value of manufactured durable goods exports made up 66.4% of Washington’s total export value.
  • Recently, Washington export prices have been higher than in the U.S. overall. This is partly due to higher priced commodities, but also reflects the fact that Washington export firms are able to achieve higher profits than those in the nation overall.
  • Real exports of petroleum and coal products, the state’s number three commodity, have averaged 23.3% annual growth since 2008.

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Victoria Bond
Beacon Economics

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