At the Alaska World Trade Center’s 2012 Economic Forecast program, guest speakers spoke often about how China will play an even greater role in the economy of Alaska and that of the world.
Alaska World Trade Center and Juneau’s Chamber of Commerce hosted three speakers at the Juneau Arts & Culture Center on Thursday to outline the state of economy in Alaska and around the world. The annual event, in its ninth year, is also held in Anchorage and Fairbanks.
The event was designed to give attendees “a statewide perspective on the prospects in 2012 for Alaska’s major industries, state and federal government spending and how this will affect communities and jobs,” according to an Alaska World Trade Center announcement.
Jonathan King, the principal and senior economist from Northern Economics reported on the Alaska’s major industries and industry contribution to the state’s economy. King also predicted industrial performance in 2012. He said the United States is facing the longest employment recovery in the post World War II era. It will take three to four more years to get back to pre-recession levels, King said. The outlook is darkened by the fact that the U.S. has twice as many long-term unemployed as would be expected normal.
“There are a number of reasons why this is so stubborn, and it will stay that way until we restructure our economy,” King said.
However, Alaska has a lower unemployment rate than the nation at 7.2 percent — and Juneau’s unemployed account for 4.9 percent of the potential workforce.
And a healthy job market isn’t the only thing going well for Alaskans.
“You are sitting in the most prosperous economy Alaska has ever had,” King said. The state set a record gross state product in 2011 and is expected to stay level in 2012.
The U.S. also faces a debt that equals its gross domestic product. The country has a $15 trillion debt and $15 trillion economy. Everyone in the U.S. would have to work for an entire year and dedicate every dollar to pay down the debt in one year, King said. Paying down the debt is important, King said, but the U.S. really needs to grow its economy to deal with this level of debt — it’s not just too much debt, it’s also too little economy.
Household confidence is up in Alaska. However, people have less confidence in their community and even less in their state, King said. This reflects people’s confidence in their own finances, but less so in their neighbors.
More people think things are getting better than think things are getting worse, King said. However, the majority of Alaskans think the economy has stayed the same.
“This reflects the slow improvement in the economy,” King said.
Alaska has seen the bounty from high oil prices, King said, but at the same time the state faces troubling declines in oil production. Unless something is done, King said, there will come a time not too far off when oil production won’t keep up with spending to which the state has become accustomed. Oil accounts for 92 percent of state revenue and the state is getting used to over $90 per barrel oil.
King said that the 2012 legislative session is important for Alaska’s future oil production.
“Get engaged in this discussion,” King said to the attendees.
Federal spending will decline in 2012, King said, with layoffs and a 30 percent decline in federal transportation spending.
Speaking about the state of the international economy, Aryam Vázquez, global emerging markets economist for Wells Fargo Country Risk Management Group, had little good news for attendees as he discussed emerging market economic trends and markets important to Alaska.
“We are living in an increasingly unbalanced global economy,” said Vázquez. Vázquez conducts in depth economic, political and financial market analysis and risk assessment on the principal emerging markets.
Emerging markets are going to play an increasingly important role in global economics, Vázquez said.
Vázquez said a structurally weak U.S. economy and a European Union with members that have worse bond ratings that Pakistan will be more reliant on China as time goes on. China and other emerging markets such as India and Brazil will play a greater role in world economics as wealth migrates from developed to undeveloped markets.
While the U.S. economy is expected to grow by 2 percent in 2012, Vázquez said, emerging markets may see 5.7 to 5.8 percent growth. Mexico is expected to outdo U.S. growth with 3 percent.
Vázquez said he partly blames the slow-growing U.S. economy on “gross incompetency coming out of Washington.”
Vázquez said the global economy could face several risks in the coming year. European Union banks could see trouble due to the fallout from sovereign debt issues. The markets are very distrustful of the EU, Vázquez said.
The U.S. could also see a double-dip recession due to the aforementioned policy failure in Washington, Vázquez said. However, the probability decreases day by day, he said.
China could constitute another global economic threat. If China reacts too fast or not at all to its “overheated economy” there could be trouble. Vázquez said he believes China will conduct a “soft landing” of its economy.
The Chinese “are concerned about growth overall,” Vázquez said. “The last thing they want is a political disaster.”
Greg Wolf, executive director of World Trade Center Alaska announced Alaska’s $5 billion in 2011 exports and discussed where those exports go and the impact of exports on Alaska’s economy.
Alaska exported to the world $5 billion in goods in the first 11 months of 2011, Wolf said. That ranks Alaska 37th in the nation. Which is good, Wolf said, considering Alaska isn’t a large manufacturing or agriculture state and its population is relatively small.
Export jobs are high paying, Wolf said, and the 340 Alaskan businesses employ 15,000 workers directly and 9,800 indirectly.
China has taken over as Alaska’s No. 1 purchaser of export goods, Wolf said.
2011 marked the first time Japan was not Alaska’s No. 1, he said. And China’s growth was fast.
“Unprecedented,” Wolf said. A decade ago China imported $100 million in goods from Alaska. Today exports to China total $1.5 billion.
Wolf said that growth in emerging markets and the resultant scarcity in natural resources will fuel export in the future. A weak U.S. dollar also encourages travel and investment in Alaska, he said.
• Contact reporter Russell Stigall at 523-2276 or at firstname.lastname@example.org.