Falling $0.2 billion, state exports totaled $34.2 billion, according to a new report from the Kelley School of Business’ Indiana Business Research Center.
Indiana relies heavily on its export market. Indiana’s dependence on exports ranks 12th nationally, according to an IU press release.
This means that further drops in export numbers could spell bad news for a state economy that has recovered well since the Great Recession.
“Our exports, as a percentage of gross domestic product, is greater than our economy would suggest,” said Timothy Slaper, director of economic analysis at the IBRC. “Compared to others, we have more jobs and more output linked to producing exports.”
Slaper also said that if current trends continue, the Hoosier state can expect to see slowed job growth.
Overall export growth in the United States in 2013 was 2.2 percent, according to WISER Trade data. In the Midwest, it was 1.2 percent.
In Indiana, 2013 growth was negative 0.7 percent.
Because of the nature of exports, local issues stem from global economic problems, especially those currently faced in Europe.
Economic growth in the Eurozone, countries who have adopted the Euro as their sole legal tender, has been anemic, Slaper said.
The Eurozone crisis began in 2009, when several European central banks asked for government bailouts from the European Union. Since then, economic conditions in the Eurozone have declined.
According to data from Eurostat, the organization which provides statistics to the EU, unemployment in the Eurozone hit 11.9 percent by 2013, a 3.8-percent increase from pre-crisis numbers.
The data also showed that debt and budget deficits in the Eurozone have risen.
Because of these factors, demand for Indiana exports have fallen in the Eurozone, which makes up a good size of the state’s exports.
Germany and France are two of Indiana’s top-five export destinations. Combined, the two countries purchased around 10 percent of state ?exports in 2013.
Emerging markets outside of the EU’s influence also played a role. Less-than-expected growth in Brazil, Russia, India, China and South Africa, known collectively as BRICS, put a damper on overseas trade.
“China is the 800-pound gorilla of BRICS,” Slaper said. “China has been growing at double digits for a really long time. But you can’t sustain that forever.”
Brazil is also a large importer of Indiana goods. Together, the two made up about 8 percent of Indiana exports last year.
Other emerging economies don’t purchase enough Hoosier exports to have a substantial effect on the state’s economy, which may be a problem within itself.
Trade outlook in these markets with first-world ?nations are often positive as their respective middle classes begin to demand higher quality goods that are not bought from Indiana.
Slaper said there are other economies which might begin to emerge.
One such nation is Mexico, Indiana’s second-leading export destination. Between 2012 and 2013, revenue from exports shipped to Mexico grew 2.4 percent, according to data from WISER Trade.
As Mexico begins to enter the emerging markets, its middle class will demand more of the quality goods that Indiana exports.
Also, the advanced economies of the Eurozone and emerging economies of BRICS are beginning to import more pharmaceuticals, Indiana’s second-leading industry.
Growth in the pharmaceutical industry has risen 21.5 percent and accounts for more than a quarter of the money brought in by Indiana’s top-five export industries.
Growth doesn’t have to be spurred overseas, either. Small and medium-sized industries within our borders could also get in on the export game, Slaper said.
In a report from the IBRC, a list of 925 small market enterprises had positive export gaps, meaning they could benefit from increasing their number of exports.
Of these enterprises, 412 of them had less than 100 employees and all of them had less than 500 employees.
But it’s their size that Slaper cites as the reason why they haven’t spurred export growth.
“It may be intimidating for a medium-sized business owner with just 200 employees to think about going to a trade meeting in Santiago,” he said. “They may need some handholding to help them out, but it would give them additional markets, profits and employment.”
Slaper said he can’t predict if declining exports in Indiana will be a trend. Even with potential export growth coming from an emerging Mexican economy, a larger pharmaceutical industry and more local small businesses looking to venture into overseas trade, the future is bleak.
“One can expect that with the anemic global growth, we’re not going to see a strong uptick in our exports,” he said.
