U.S.’s biggest trading partners – Mexico, Japan and Germany reported this week a double digits plunge in output in their economies, underscoring once again the severity of the global recession.
From WSJ: All three countries depend on exports to the U.S. But they have nose-dived as U.S. consumers cut back purchases of autos, electronics and other goods mass produced abroad. For the first three months of 2009, U.S. merchandise imports declined about 30% to $352.5 billion compared with the same period a year earlier. Mexico’s ties to the U.S. are particularly strong because of the North American Free Trade Agreement, and Mexican auto production in the first quarter fell 41% from the year before.
Most forecasters and governments see signs that the current quarter will be better than the first, and the rise in global stock markets suggests investors believe the worst is past. Still, the decline in output overseas reduces the market for U.S. exports and opportunities for investment.
Our economy will begin to recover once our exports exceed imports. Let’s hope the economies of these nations will not shrink any further.