Orange County exports are expected to grow by nearly 6% this year to reach about $26.2 billion, according to a study by California State University Fullerton’s Center for Economic Analysis and Forecasting.
The report, authored by economists Mira Farka and Adrian Fleissig, provides analyses of export data for the Southern California region, including forecasts for OC and the Los Angeles-Long Beach-Santa Ana metropolitan area.
OC in 2012 had $24 billion in exports, the latest figure available according to the school’s research. Numbers for 2013 and on are forecasts. Farka and Fleissig said the county will have had a 3% growth in exports in 2013, to about $24.7 billion. The growth rate is likely to come in at 5.7% this year, and about 7.6% in 2015.
“Orange County exports are projected to increase steadily over the forecast horizon (between) 2013-2015, reaching just over $28 billion by 2015,” the report said, noting that the “pace of growth is expected to be less robust” than in earlier years. 2010 and 2011, for instance, each had exports growths of about 22%, coming off of a down year in 2009.
The projections for Orange County compare with those for the L.A. metropolitan area: the report predicted that the greater region will have seen about a 2% growth in 2013, about 5% in 2014 and 7% in 2015.
“The more upbeat outlook in the next two years reflects strong fundamentals at the local and national level, a more robust outlook for the advanced economies and a more stable environment for emerging economies,” the report said. “The still-modest rate reflects in part the economic challenges faced by the main recipients of Orange County exports in the first half of 2014. As the global economy is poised to expand more surefootedly in 2015, OC merchandise exports are projected to grow more robustly.”
OC’s largest export-recipient country is Mexico, followed by Canada. The two combined for about 37% of total OC exports in 2012. Other key countries are China, Japan and South Korea.
The report said exports to those countries are expected to increase by double digits over the next few years, including by about 19% to Mexico, 28% to China, and 24% to South Korea.
Orange County’s exports have been driven primarily by computer and electronic products, which accounted for $7.2 billion, or about 30% of the county’s 2012 total. Other strong sectors are transportation equipment, machinery and food.
“Exports are projected to grow for all sectors during the forecast horizon,” the report said, pointing out that exports in computer and electronics could hit about $8.5 billion by the end of 2015.
The report also said OC will benefit from an economic recovery on a global scale. The free-trade agreements with South Korea and Panama, for instance, could have large impacts.
A potential challenge for OC and U.S. exports could be an “imminent dollar strengthening” due to expectations of interest rate increases here.
“Our view is that the Fed will not start raising rates until the third quarter of 2015 and even then the rate hikes are expected to be measured, spaced out … and well telegraphed in advance,” said the report. “As such, though the normalization of monetary policy will likely adversely impact exports … we expect this impact to be marginal and certainly not derail the upward path of US and local exports.”
