Exporting to a Recovering Asia.

• Author: WOLF, GREG

Is there enough economic healing in Asia to bring health to Alaska's export industry?

Predicting the future, particularly in economic trends, is no easy task. However, as the new year is ushered in, prospects are bright for Alaska's major export industries. Supporting this positive prognosis is the ongoing economic recovery in Asia and a corresponding rebound in commodity prices important to Alaska exporters. In addition, a recent upsurge in demand from several European countries also bodes well.

Economic conditions in Asia are always a critical factor for Alaska's international trade performance. The lion's share of the state's trade has traditionally been with the nations of the Pacific Rim. At present, 80 percent of Alaska goods and commodities are destined for Asia, with Japan and Korea the leading customers. These two countries alone account for 72 percent of the state's total exports. Other important markets for Alaska are Canada, China and Taiwan. The relative strength of these economies and their currencies has a substantial impact on how well Alaska's exporters will fare in any given year.

Looking Back

Feeling the full effects of the Asian economic crisis that besieged the region in the summer of '97 (sometimes referred to as the "Asian Flu" or "Asian Contagion"), 1998 was a difficult year for Alaska's exporting companies. Industrial output in those countries slowed considerably and currency values plummeted. On top of this, Japan remained mired in a recession that had begun nearly a decade earlier. As a result, both demand (volume) and the price (value) for Alaska's exports suffered. Overall, exports from Alaska fell some 34 percent Looking at specific markets, trade with China dropped 38 percent, Japan and Korea were both down 35 percent and Taiwan, which managed to avoid the worst symptoms of the crisis, declined by 12 percent.

However, almost as quickly as the crisis had struck, the economies in the region began to recover as governments and industry moved quickly to implement needed reforms and restructuring. As 1998 came to a close there were signs that a recovery was well underway. Low and stable interest rates, strengthening currencies, rising stock markets and improving investor and consumer confidence all pointed toward a genuine economic turn-around.

As this article is written, the recovery in these markets is already being reflected in Alaska's export numbers. Almost all of the ground lost two years ago has been...