Florida Chamber Chief Economist Dr. Jerry Parrish Details The Coronavirus’ Threats on Florida’s Economy

“With companies cutting their GDP forecasts, 30-year mortgages at an eight-year low, and manufacturers idling their factories because of supply-chain issues, all of this is having an effect on Florida’s economy.”

– Dr. Jerry Parrish

TALLAHASSEE, Fla (February 25, 2020) – Florida Chamber Foundation Chief Economist Dr. Jerry Parrish says Florida should be “concerned, but not panicked” about the coronavirus’s threats on Florida’s economy.

“Yesterday the Dow dropped by more than 1,000 points, companies are cutting their GDP forecasts, 30-year mortgages are at an eight-year low, manufacturers are idling their factories because of supply chain issues. All of this is having an effect on Florida’s economy, and it could continue. This is certainly a concern, but it’s not anything to panic about,” Dr. Parrish explained in his latest Florida By The Numbers report.

According to Dr. Parrish, Florida’s most vulnerable industries include:

• International Visitors
• Cruise Passengers
• Imports/Exports
• Manufacturing Jobs

The 10-year government bond, and the three-month T-bill are now showing an inversion.

“An inversion of the yield curve has been a reliable, but not perfect signal, of a future recession. This is one of the metrics that goes into the calculation of the probability of a Florida recession which is on TheFloridaScorecard.org,” Dr. Parrish explained. “The probability of Florida being in a recession over the next nine months has now increased to 24.1 percent.”

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A Focus on Brazil and Mexico

Brazil

For the fifth time this year, economists have reduced their economic forecasts for Brazil for this year and next year. Economists also increased their estimate for the 2015 inflation rate to 8.97 percent from 8.79 percent, according to a weekly central-bank survey.

The government of Brazil announced at the end of June the launching of its National Export Plan (PNE) to increase exports as a means of helping prop up its weakened economy.  The plan will focus on five areas: access to markets, commercial marketing, ease of trade, export financing guarantees and the improvement of the fiscal system related to foreign trade.

Brazil’s president recently outlined a $65 billion infrastructure plan to sell to the private sector new concessions to build and operate nearly 7,000km (4,350 miles) of roads, as well as four large airports and a number of ports and railways.

Under the package, Brazil will offer concessions worth about R$66bn for roads to connect soybean growers of the interior to ports, R$86bn for railways, R$37bn for ports and nearly R$9bn for airports, including for the cities of Salvador, Florianópolis, Fortaleza and Porto Alegre.

President Rousseff stated that her administration will directly engage in activities that will expand and diversity market access for Brazilian products and will be making more official trips abroad to support the plan.

 

Mexico

Mexico’s Global Economic Activity Index rose 2.4 percent in April compared to April 2014, an increase fueled by growth in the agricultural sector.

The Mexican government will hold its first of several petroleum auctions this week.  This will effectively end the monopoly of state-owned Petroleos Mexicanos (PEMEX) which began in 1938 when the country’s oil fields were nationalized.

The auction will cover 14 shallow-water blocks in the southeastern Gulf of Mexico. Seven groups and 17 companies — including two of the world’s largest, Exxon Mobil Corp. and Chevron Corp. — have prequalified to bid. Mexico will auction onshore fields later this year, followed by auctions of deep-water and shale fields.

Mexico is expanding beyond the low-wage, low-value manufacturer that it was when NAFTA was first implemented over 20 years ago.  With an increasingly skilled Mexican workforce and a growing middle class, foreign direct investment into high-value manufacturing facilities has been increasing with more in the works.

This is a near-shoring trend that was recently fueled by the west coast port congestion which triggered many to review their supply chains and look for alternatives that would provide them with more consistent and reliable production centers.  Mexico has multiple routes of entry in the US and offers reduction in cost of transportation and improved speed to market.

Mexico is also the second-largest source of high-value, high-tech products such as cell phones, gaming consoles and computers, after China.

The Mexican government is moving to enhance its competitive position by investing heavily in road, rail and aviation infrastructure improvements and by streamlining its customs procedures.

  • The U.S. Department of Transportation recently began permitting Mexican motor carriers to apply to conduct long-haul, cross-border trucking services. Under this program, Mexican trucks must be inspected and are required to meet the same safety requirements as U.S. trucks.
  • Mexico is continuing to work with Canada and the U.S. to improve customs harmonization and signed on to the Wassenauer Agreement on export controls last year which, along with implementing an export control system along with its single platform on imports they now have greater trade compliance
  • Cargo security is improving and IP protection is as strong as or stronger than in many other countries around the world.

Opportunities for Florida Firms:

Over the next four years, the Government of Mexico plans to invest more than $600 billion to modernize its energy, transport, telecommunications, and water and environment sectors. In order to support the country’s ambitious reform efforts and position U.S. firms for success implementing critical infrastructure projects, USTDA developed the Mexico Infrastructure Project Resource Guide to provide U.S. industry with details on Mexico’s infrastructure sectors and specific infrastructure development plans through 2018. The resource guide includes over 25 project profiles, complete with real-time market intelligence, detailed project plans, contact details for key decision makers, procurement timelines, and planned financing mechanisms.

Project profiles in the guide are separated by sector, and include energy, transport, telecommunications, and water and environment. The full guide can be viewed and downloaded on USTDA’s website.

US and Africa Aim to Boost Trade

By WILLIAM MAUDLIN and DREW HINSHAW

U.S. and African leaders meeting in Washington on Monday kicked off a campaign to renew a program that gives exemptions on U.S. tariffs and quotas in an effort to boost trade and stimulate the economies of sub-Saharan African countries.

Leaders in the U.S. and Africa are looking to spur economic ties at a time when trade between the two is sinking and China’s hunger for commodities is boosting Beijing’s influence on the continent.

U.S. Secretary of State John Kerry, center, discusses the African Growth and Opportunity Act on Monday during the U.S.-Africa Summit at the World Bank in Washington. AFP/Getty Images

American officials and lawmakers say extending the 14-year-old African Growth and Opportunity Act, or Agoa, is crucial to preserving trade ties with fast-growing African countries, especially when U.S. trade negotiations at the World Trade Organization and with other major economies have stalled.

China passed the U.S. in imports in 2012 and imported $88 billion from sub-Saharan Africa in 2013, according to the International Monetary Fund. Partly because of increased oil production at home, U.S. imports from the region plunged to $34.5 billion last year, from a peak of $78.2 billion in 2008, with exports showing some gains in recent years.

Agoa is part of a strategy to increase economic ties with a growing Africa—including in trade and power generation—as China strengthens ties on the continent and the European Union negotiates free-trade agreements there. The goal, U.S. officials say, is to replace foreign aid with trade.

Building economic ties could also help contain conflicts that have convulsed Africa, said Erastus Mwencha, deputy chairman of the 54-nation African Union.

But critics point out that the bulk of African trade is oil shipments from West Africa, and U.S. agricultural and textile interests have opposed efforts to expand the list of products eligible for tariff and quota breaks.

President Barack Obama’s trade policy has faced delays and dogged opposition in Congress, and a similar preferential tariffs program for the developing world was allowed to expire last year.