Growth markets of the '80's: Western Europe

Business America, May 27, 1985

The most important export market for the United States is Western Europe. After three years of little or no economic growth, Western Europe is now showing an increase in real rates of growth, along with lower inflation, restoration of business confidence, a pickup in business orders, and an upturn in construction.

The results of this improved business climate will be increased purchases of U.S. goods and services. The high quality and technological sophistication of American products make them attractive and competitive in the European marketplace. Sales of computers, electronic components, avionics equipment, medical equipment, scientific instrumentation, and telecommunications equipment have good prospects as these countries seek to improve their competitive capabilities. Such products also tend to be more quality and less price sensitive--an important consideration with the strong U.S. dollar. Other, less advanced equipment, is in demand in particular countries with specific needs.

Following are brief summaries of the economies of individual European countries, and a list of specific products which offer good prospects for U.S. exporters in each country. The information was drawn from the 1985 edition of Growth Markets of the 1980s: Western Europe, published by the Office of Western Europe, International Economic Policy, International Trade Administration. The report is based on market analyses by International Economic Policy Desk Officers, using information provided by experienced U.S. and Foreign Commercial Service Officers serving in Europe and other information from foreign government sources.

The full report provides detailed information on product categories in greatest demand in each country, and an index by product category.

Ordering information appears on the back cover of this magazine.

Austria

Real economic growth rose 2.5 percent in 1984 and is expected to rise 3 percent in 1985. U.S. sales prospects will improve as economic activity picks up, and the only potential impediment of note to U.S. sales in Austria will be the continued strength of the dollar vis-a-vis the schilling. Austrian imports in 1984 totaled $19.6 billion, 3.5 percent of which was from the United States.

Best Prospects: computers and peripheral equipment, medical apparatus and equipment, electronic components, analytical and scientific instruments.

Belgium

Luxembourg

Belgium has an open market economy with few import barriers. Foreign trade, the mainstay of the economy, amounts to over 100 percent of GNP, with a large portion of imports reexported. Belgium is, as a trading and distribution center, ideally located at the crossroads of Europe. U.S. exports to Belgium declined from 1981 to 1983, but were up 5 percent in 1984, reaching $5.3 billion. In spite of the strength of the dollar against the Belgian franc, Belgium will maintain its position as the United States' fifth largest European customer.

Belgium is struggling to pull out of the recession which has gripped it since 1980. As a small country, Belgium needs the growth generated by its major export markets--West Germany, France, and the Netherlands--to fully recover from its present economic stagnation.

Encouraged by tax cuts for business and lower wage costs, firms are now investing in capital equipment and should provide an expanding market for U.S. suppliers. While the current economic recession and high dollar have cast a cloud over short-term prospects for increased U.S. exports to Belgium, the long-term picture is attractive for firms that lay the groundwork now.

Best Prospects: business and office equipment; process control, analytical, and scientific instruments; franchising; computer software and services; computers and peripheral equipment; materials handling machinery.

Cyprus

(Greek Cypriot portion of the island)

Bucking the world recession, the Cyprus economy has prospered in recent years. Real GNP growth in 1984 was 4.7 percent (up from 2 percent in 1983), with a modest 6 percent inflation rate. Tourism and domestic consumption led the increases, with unemployment low at 4 percent. Although a small market for the United States, the Cyprus economy is flexible and the Cypriots are astute traders. U.S. agricultural products, especially grains, account for the largest share of our exports to the island. The U.S. share of the Cyprus market was 4.5 percent in 1983 or $54 million, and $74 million or a 37 percent increase in 1984. U.S. direct investment is estimated to be no more than $17 million.

Best Prospects: heating, cooling, and solar energy equipment; food processing and packaging equipment; hotel and restaurant equipment; computers and office equipment.

Denmark

The Danish economy continues its strong growth. Real GDP expanded by 4 percent in 1984. A 3.2 percent growth is predicted for next year, and annual increases of about 3.8 percent are forecast through 1989. Rising North Sea oil and gas production and lower wage rises than those of its trading partners contributed to this growth, and should enable Denmark to reduce its current account deficit--which now stands at $1.7 billion--within the next few years. Investment is up sharply, particularly in the furniture, food processing, and engineering industries. Total exports in 1984 were valued at about $13.2 billion, and imports at $13.8 billion, resulting in a deficit of $600 million, up somewhat from the $230 million deficit of 1983. During 1984, imports rose much faster than exports, principally due to investments expenditures for raw materials and capital equipment, and fuels for industry.