Indiana and the Midwest exports to the EU continue to grow
The data is now available for US exports for the first six months of 2011. Overall, exports from the US to the 27 members of the EU grew by $17 billion or 15% compared to the first six months of 2010. As figure 1 shows, Indiana’s exports to the EU increased by 3.7% or $151 million. In addition, despite the European debt crisis, the Hoosier State’s exports to the 17 countries using the euro increased by 15% or $454 million. However, Indiana’s neighbors tended to see even greater growth, except for Kentucky and Minnesota. The biggest increase was seen in Illinois, with its exports increasing by 27.5% or $1.2 billion.
Germany was in the news today, as its economy grew by only 0.1% in the second quarter (i.e. May through July) of 2011. According to the BBC, part of the decline in the growth rate was due to Germany exporting fewer goods while imports increased. As figure 2 shows, Indiana helped fuel this problem, as Germany remained Indiana’s largest non-North American trading partner and the Germans bought more goods in 2011 compared to 2010. In fact, Indiana ranked 7th among the 50 states in size of exports to Germany. Figure 2 also shows that although overall exports to the EU only grew by 3.7%, some countries have experienced much larger growth rates.
Among the biggest European economies, while exports declined to France and the United Kingdom, they increased for all of the infamous PIIGS (Portugal, Ireland, Italy, Greece, and Spain) except for Greece. In fact, Spain’s imports increased by 51%, making it the third largest European market for Indiana. In addition, while Portugal has received a bailout this year, it still bought almost 1.5 times as many Hoosier goods this year as last year.
Spain’s increasing importance to the Indiana economy has increased rapidly. In 1997, Spain bought only $65.4 million worth of goods (or 2.4% of all goods sent by the Hoosier State to the EU). So far this year, Spain has already bought $590 million (or 14% of the total), place Indiana second (after Texas) as Spain’s US trading partners. If trends continue, Spanish imports from Indiana will be 18 times the size of the original 1997 numbers. As the same time, as figure 3 shows, while Spain has become a more important trading partner, Indiana’s traditional European trading partners, France and the United Kingdom are losing ground.
Originally this was only relative, but so far this year, trade has declined in absolute terms as well. Examining trade with the two countries a little closer (figure 4), it appears that much of this decline can be attributed to the chemical sector. Unfortunately, we cannot yet dig deeper into this data, but this category does include pharmaceuticals. In fact, other exports to the UK increased over last year, but the decline in chemicals hides this gain.
Yet again, Indiana’s exports to the EU are mixed, but the general trend is encouraging and reflect not only the Hoosier State’s increasing internationalization and diversification.