NM’s export growth stalls
Worldwide sales slump $150M in 2016; strong dollar a culprit
Worldwide sales slumped by $150 million in 2016; strong dollar a culprit
New Mexico’s export boom hit a bump in 2016. Sales worldwide fell by about $150 million, or nearly 4 percent, last year compared with 2015, thanks to a sharp decline in shipments to Israel and, to a lesser extent, to Canada and Mexico, according to U.S. Commerce Department statistics released this month.
Trade experts cite many factors, including the strength of the U.S. dollar, which drives export costs up while making imports cheaper. The Mexican peso, for example, fell sharply against the dollar last fall, likely slowing sales by New Mexico-based suppliers south of the border.
President Donald Trump’s rise to power may also be rocking the boat, generating uncertainty over forthcoming federal trade policies. And, as always, changes in the ebb and flow of exports by Intel Corp.’s Rio Rancho plant likely skewed New Mexico’s trade performance in 2016.
Still, overall sales to foreign countries remained at nearrecord levels last year, after reaching an all-time high of $3.8 billion in 2014. Total exports worldwide have fallen by $170 million, or about 4.5 percent since then, but they remain about $900 million higher than in 2013.
“New Mexico’s exports are slightly down, but still pretty steady worldwide,” said Robert Queen, director of the Commerce Department’s New Mexico Export Assistance Center. “It’s basically a flatline from one year to the next, similar to what we’re seeing in neighboring states.”
Worldwide, the might of U.S. currency is likely playing a role, particularly in trade with Canada, which until last year was New Mexico’s third-largest trade partner after Mexico and Israel. Exports to Canada fell 28 percent in 2016, capping four years of steady declines that have pulled sales there down from nearly $290 million in 2013 to $136 million last year.
As for Mexico, the peso’s plummet helped feed a $12 million, or 7 percent decline in exports, said Jerry Pacheco, executive director of the International Business Accelerator at Santa Teresa. Although small, the drop halted a sixyear run up that had pushed New Mexico exports southward to an all-time high of $1.68 billion in 2015.
Trump’s triumph in November is a central factor in the peso decline. And that, in turn, may have encouraged New Mexico’s border suppliers to stock less inventory as demand in Mexico became less certain late last year, Pacheco said.
Now, uncertainty over federal trade policy is apparently pushing U.S. suppliers to Mexico to postpone significant capital investments until the future becomes more clear.
“Several local companies, and some that we’re recruiting, have postponed projects or simply said they won’t go forward because of the Trump factor,” Pacheco said. “All along the border, businesses are saying they have to know what the rules are first. It’s the uncertainty of what could be coming.”
Meanwhile, changes in trade by Intel — the state’s single largest source of sales overseas — generally explains the 53 percent plummet in exports to Israel, which fell from $1.08 billion in 2015 to $508 million last year. About 97 percent of New Mexico sales to that country are computer and electronic products.
Likewise, a 324 percent surge in exports to China, from $117 million in 2015 to $497 million last year, likely reflects Intel’s changing trade patterns with its sister facilities overseas.