ARIZONA & MEXICO

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Exhibit 3: Arizona’s Merchandise Exhibit 3: Arizona's Export Growth Exhibit Merchandise 3: Arizona's Export Merchandise Growth Export Growth 30 30 Exports to Mexico Exports to Mexico 20 20 Exports to Rest of World Exports to Rest of World 10 10 Percent 0 0 Exhibit 3: Arizona's Merchandise Export Growth -10 Percent -10 -20 -20 Exports to Mexico -30 -30 Exports to Rest of World -40 -40 2002 2003 2004 2005 2002 2006 2003 2007 2004 2008 2005 2009 2006 2010 2007 2011 2008 2012 2009 2013 2010 2014 2011 2015 2012 2013 2014 2015 Source: Arizona-Mexico Economic Indicators As Exhibit 3 also shows, Arizona’s exports of goods declined during 2009, reflecting the impact of the global economic crisis. The crisis impacted export growth because most countries around the world experienced declining income growth (or outright declines in income), which is one key driver of exports. Countries with declining income tend to purchase fewer goods and services, including those bought from abroad, other things the same. The good news on this front is that the Mexican economy has been expanding lately and it is expected to continue to grow. One important risk to the continued growth, however, is the rapid decline in crude oil prices since mid-2014. In addition, Mexico is also a relatively large economy. According to data from the Organization for Economic Cooperation and Development (OECD) Mexican nominal GDP was U.S. $2.0 trillion in 2013. That was similar to the GDP of Italy and larger than GDP for South Korea, Spain, and Canada, for example. Of course, U.S. GDP was much larger in 2013, at $16.7 trillion. The OECD estimates Mexico’s population in 2013 at 118.4 million, larger than Germany, France, the U.K., and Italy. U.S. population in 2013 was 316.5 million. THE POTENTIAL IMPACT OF A STRONG U.S. DOLLAR ON TRADE WITH MEXICO Another important driver of U.S. and Arizona exports is the value of the U.S. dollar. If the dollar appreciates against most foreign currencies, this will tend to reduce U.S. exports (and increase U.S. imports from abroad), other things the same. The reason is simple: a U.S. dollar appreciation means that 2003 one 2004 unit of foreign 2005 currency 2006 buys 2007 fewer U.S. 2008 dollars. 2009 This, in turn, 2010implies 2011 reduced 2012 purchasing 2013power 2014 in 2015 the U.S. and lower U.S. exports. One major development during the past year and a half has been a significant appreciation in the value of the U.S. dollar versus most foreign currencies. As Exhibit 4 shows, the dollar rose by 22.2% from June 2014 to January 2016 against a broad market basket of currencies and is now at its highest level since March 2003. The dollar appreciation has been driven by widening differences in interest rates and economic growth across the globe. 27 • ARIZONA & MEXICO • ARIZONA TOWN HALL • APRIL 2016
Exhibit 4: Selected U.S. Dollar Exchange Rates Source: Arizona-Mexico Economic Indicators The U.S. dollar has also been rising against the Mexican Peso, as Exhibit 4 shows. Indeed, as of January 2016 the dollar has appreciated by 39% against the peso since mid-2014 and is now at an all-time high. The strengthening of the U.S. dollar against the Peso suggests that we will see somewhat slower export growth in the coming year, other things the same. ABOUT THE AUTHOR George Hammond is Director and Research Professor, Economic and Business Research Center (ebr.eller.arizona.edu), Eller College of Management, University of Arizona. APRIL 2016 • ARIZONA TOWN HALL • ARIZONA & MEXICO • 28
Page 1 and 2: ARIZONA & MEXICO APRIL 2016
Page 3 and 4: ARIZONA & MEXICO APRIL 2016 CONTENT
Page 5 and 6: TOWN HALL PARTICIPANTS AND OBSERVER
Page 7 and 8: MUNGER, JOHN: Munger Chadwick PLC,
Page 9 and 10: Report of the 108th ARIZONA TOWN HA
Page 11 and 12: Emerging trends in the global econo
Page 13 and 14: Education, including cross-border e
Page 15 and 16: GLOBAL ECONOMIC TRENDS AND OPPORTUN
Page 17 and 18: Transportation, Arizona Transportat
Page 19 and 20: • Request the Arizona Congression
Page 21 and 22: ARIZONA & MEXICO BACKGROUND REPORT
Page 23 and 24: TRANSITIONS IN THE MEXICAN ECONOMY
Page 25 and 26: lost revenue from petroleum exports
Page 27 and 28: Table 1: Mexican States and Populat
Page 29: Exhibit 1: Arizona's Merchandise Ex
Page 33 and 34: Map 1: United States Ports of Entry
Page 35 and 36: Table 2: Traffic at United States P
Page 37 and 38: Traded goods are grouped into 98 co
Page 39 and 40: Two other Mexico Federal roads have
Page 41 and 42: Figure 3: Mexico’s Port infrastru
Page 43 and 44: THE MAQUILADORA/IMMEX SECTOR - A KE
Page 45 and 46: Whereas exports and imports to and
Page 47 and 48: total). Sonora’s share is about 6
Page 49 and 50: Several other sectors, such as fabr
Page 51 and 52: THE ROLE OF ARIZONA IN THE U.S.-MEX
Page 53 and 54: Nogales and the wholesale prices pa
Page 55 and 56: REGIONAL IMPACT OF FRESH PRODUCE FR
Page 57 and 58: Department of Transportation (ADOT)
Page 59 and 60: Santa Cruz County’s dependence on
Page 61 and 62: SUMMARY The fresh produce industry
Page 63 and 64: of the largest Latin American produ
Page 65 and 66: Table 1: Roles and Responsibilities
Page 67 and 68: Map 1: Electricity Transmission Poi
Page 69 and 70: MEXICAN VISITORS: PARTY CHARACTERIS
Page 71 and 72: A contributing factor to both the d
Page 73 and 74: non-U.S. citizens is assumed to be
Page 75 and 76: positive message to potential visit
Page 77 and 78: WORKFORCE TRENDS AND ECONOMIC DEVEL
Page 79 and 80: Among the many responsibilities of
Page 81 and 82:
with the City of San Luis Incubator
Page 83 and 84:
mutually beneficial initiatives. In
Page 85 and 86:
CONCLUSION Through cooperation and
Page 87 and 88:
New Car Plants in Mexico, 2005-19 S
Page 89 and 90:
Town Hall Date Subject ARIZONA TOWN
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ARIZONA & MEXICO

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