Global economic forecasts mixed
- Jim Redden
- Portland Tribune - News
Increasing exports called good for Oregon
Local business leaders received some mixed predictions about the global economy Wednesday morning, with upbeat news mixed in with grim forecasts.
Among the predictions - International trade will increase in Oregon while the United State barely avoids a double-dip recession, Europe will fall into a recession even as China's economy continues to grow, and counties with increasing middle classes like Brazil will offer welcome business opportunities.
The predictions were delivered at the monthly breakfast meeting of the Portland Business Alliance, which represents business owners in downtown and surrounding areas. The three speakers were an international banker and the leaders of two local businesses: Morgan McGrath, head of international banking for JP Morgan's Chase's Commercial; Calvin Johnson, CEO of the Leupold and Stevens vision equipment company; and Mark Reis, CEO of the Yakima Products recreation container company.
McGrath started the presentations by summarizing the global economic up and downs of the past decade. McGrath said 2002 to 2007 was a period of great growth, followed by an abrupt halt in 2008 he called the 'Lehman Shock,' referring to the large financial company that went bankrupt. According to McGrath, investors grew more optimistic from late 2009 until early 2011, but a period of uncertainty has since set in, caused in large part by the earthquake and tsunami in Japan he called the "double disaster." Adding to the uncertainty is Europe's still-unresolved euro crisis and a slowdown in China's previously booming economy, he said.
McGrath said his company's economists predict the U.S. economy will only grow around one percent and Europe will enter into a recession in 2012. But he predicted China's economy continue growing around nine percent, while countries with emerging middle classes like Brazil will help buoy the global economy.
'I expect some softness, but am still predicting growth in emerging markets. 2012 will be a mixed bag, with underlying growth,' said McGrath.
According to McGrath, the continued growth in China and countries like Brazil will help Oregon, which is a major exporter. McGrath said 5,000 companies in the state export goods and services, and 90 percent of them are small and medium companies that employee 500 or fewer workers. McGarth said that nearly 25 percent of all manufacturing jobs in Oregon are dependent on exports, which accounts for $18 billion a year of the state's economy.
'Exports are a very important barometer of the Oregon economy,' said McGrath.
Johnson said Leupold and Stevens is very dependant on exports. It makes recreational and tactical vision equipment, including binoculars and riflescopes. Many of its sales are military-related, with foreign forces making up an every-increase percent of its business.
Reis said Yakama Products is just beginning to exports its products. He believes other countries with large outdoor recreation markets represent a tremendous opportunity for the company. Partly because of that, Reis says Yakama Products plans to increase its workforce by one-third in the coming year, with many of the new employees being product engineers and sales managers.
McGrath said Brazil is an especially lucrative market for U.S. companies now because it will be hosting the Olympics in 2014. Sandra McDonough said the PBA is planning a trade mission to Brazil next year to visit Portland-based businesses there and explore other opportunities.
Republican First Congressional District candidate Rob Cornilles attended the meeting, which was held at the Governor Hotel. Moderator Kerry Tymchuk noted his presence and said Cornilles supports international trade agreements- in contrast to the major Democratic candidates, who all seemed to oppose them during their televised debate the night before.
A handful of Occupy Portland protesters demonstrated outside the hotel but did not disrupt the meeting.