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Puerto Rico’s Exports To EU Post Record Gains

Imports from European Union rise despite euro’s appreciation in 2003; too early to know if terrorism will cause euro to go on downward spiral


March 25, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

Although the dollar’s value relative to the euro decreased more than 20% in calendar year 2003, imports from the European Union (EU) increased during fiscal year (FY) 2003 (July 1, 2002 to June 30, 2003). During the same period, however, exports from Puerto Rico to the EU increased to record levels.

The price of the euro last summer hovered around $1.15. Since the March 11 terrorist attack in Madrid, the euro has weakened. Before the event, one euro was equivalent to almost $1.30, but as of press time, it had dropped to $1.21. It is nonetheless still considerably stronger than the dollar.

However, it is too early to tell if this depreciation will become a trend, or if it is no more than an initial reaction to the attack, said Ignacio Monsalve, market analyst for the Spanish Commerce Office in San Juan.

Even before March 11, local retail and wholesale executives were keeping their eye on the euro’s activity. Many were concerned that the increase in its value would raise the price of EU imports, thus lowering sales. However, in some cases, sales increased.

For instance, according to statistics from the Planning Board for FY 2003, imports from Ireland rose from about $6.3 billion in FY 2002 to $7 billion in FY 2003; German imports rose from $425 million to $879.4 million; Italian imports went from $340 million to $355 million; and Belgian imports went from $234.3 million to $272.1 million.

Imports from France, however, decreased in FY 2003 to $240.8 million. In FY 2002, French imports amounted to $336.3 million. Exports to Puerto Rico from Austria and Luxembourg also dropped.

As economists had predicted, exports from Puerto Rico to the EU increased, thanks in part to the weak dollar. Of EU countries, the Netherlands bought the most from companies operating in Puerto Rico. In FY 2002, its purchases from Puerto Rico companies amounted to $108.3 million; in FY 2003, the figure jumped to $1.2 billion.

Belgium’s purchases from Puerto Rico companies also increased from $234 million in FY 2002 to $1.1 billion in FY 2003. Meanwhile, France’s purchases from Puerto Rico companies went from $288 million to $695 million in the same period; Germany’s went from $316.2 million to $519.1 million; and Italy’s from $292.3 million to $435 million.

This upward trend in imports and exports could change because of the terrorist attacks in Madrid.

This Caribbean Business article appears courtesy of Casiano Communications.
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