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US market: trends and forecasts

Posted by SI-LOG on 17/05/2019

US market: trends and forecasts

SI-LOG 17/05/2019 pubblicato in english, internationalization

The United States is still the destination for those who, armed with a pinch of courage, a desire to adapt, ambition and entrepreneurial spirit, decide to internationalize their business by investing in the stars and stripes market, which demonstrates its appreciation for Made in Italy (we have already reviewed that in the article "Internationalizing one's business in America: an overview").

The U.S. welcomes foreign direct investment and recognises its positive impact on economic growth and job creation. U.S. affiliates of foreign companies employ over five million U.S. workers and indirectly support millions more. Italy, among European countries, is the fifth largest trading partner of the United States with regard to American imports. After all, the core principle of a free market is to invigorate the entrepreneurial spirit in all of us.

In this article we analyze the US sectors in which investing is worth while and the market forecasts for the immediate future.




USA: the current market scenario

After years of stagnation and unfavorable economic conditions, the American economy has started to run again. When asked US Inbound companies to list the top three countries where, outside their home territory, they would seek growth over the next 12 months, the US topped the list.

It’s a sensible choice. The US offers solid economic growth, strong institutions, a favorable tax and regulatory environment, and innovation ecosystems for AI, the IoT, blockchain and more.

Today, demand for consumer products is on the rise and our global network of supply chains is operating at peak performance. Foreign-owned companies have been helping the U.S. economy grow for a long time. The prospects seem more attractive compared to European standards and merit is to be found mainly in a more streamlined, dynamic economic structure that is less tied to the bureaucracy compared to the too restrictive one in Italy for the business world.

Several sectors are once again expanding in the American market, starting from those related to technology and finance.

Among those that offer the greatest investment opportunities are:

  • Construction;

  • Renewable energies (the United States is the leader in the production, supply and consumption of energy);

  • Catering and the food;

  • Real estate;

  • Machinery and industrial goods.

  • Launch of new products or services

Of course, before investing, it is advisable to fully analyze and establish the best strategy, analyse and choose where to invest: the United States differs from state to state, each has its laws, its own rules, traditions, economy and mentality and which form of business adopt.

We must not forget that, despite being an open and growing market, the American one remains a world with a different exchange rate and very strong competition, where improvising can become particularly risky. For this reason, when evaluating the proper internationalization strategy, you should choose a partner that has extensive experience, who has the ability to totally support and guide you with your choice thanks to a deep knowledge of the American territory.


Forecasts and data on the American market

Last year’s broad global economic expansion saw growth pick up in most G-7 economies, although the respective weakness encountered in Q1 2018 has curbed momentum, as has a raft of geopolitical and trade tensions. The US is one of few economies to see GDP forecasts continue to trend upward, on course to achieve a growth rate close to 3% this year. The data updated to 2018 show that, in the United States, inflation is at 1% while unemployment is at around 4%. The American GDP, on the other hand, is 2.9%: the equivalent of that of Belgium. In practice, it is as if the United States in 2018 had incorporated the value of the entire Belgian economy into its own market.

Moreover, the data relating to the energy sector are amazing: it is estimated that by 2030 the US will achieve energy independence. The result of this goal will be an injection of liquidity for the American system, necessary for the infrastructural development strongly supported by Trump.

In this sense, Italian entrepreneurs have a fast track to invest in the USA: one of the pillars of Italian exports to America is machinery, industrial goods and services / plant-related products, which can guarantee a lasting relationship between the parties thanks to after-sales services such as maintenance.

The main sector of Italy’s exports to the USA is transportation vehicles, in 2017 constituting nearly one fourth of the total, followed by machinery, textiles, apparel and leather goods, and food and beverages. Automobiles are the first exported product, ships and boats are third, wines are fifth, and shoes seventh. On the product level, pharmaceutical and medical goods are also among the most important exported goods. All metals (including aluminum and steel, targets of the tariffs being imposed by the Trump administration) are less important among Italian exports to the USA, making up about 6% of the total. Italian steel and aluminum exports to the United States in 2017 amounted to 760 million euro, only 0.2% of total goods’ exports, but with a surplus in this sector as well.

In 2018, Italy's exports to America amounted to $50.1 billion or 9.2% of its overall exports.

  • Machinery: $10.7 billion
  • Vehicles: $5.8 billion
  • Pharmaceuticals: $4.1 billion
  • Foods and Beverages: $2.4 billion
  • Ships, boats: $2.3 billion
  • Medical, technical equipment: $1.9 billion
  • Electronic equipment: $1.8 billion
  • Furniture, lighting, signs: $1.4 billion
  • Clothing (not knit or crochet): $1.2 billion
  • Mineral fuels including oil: $1.2 billion

Exports from Italy advanced 3.4 percent from a year earlier to EUR 37,499 billion in February of 2019, mainly due to sales of: machinery and equipment (2.5 percent); textiles, clothing and leather (8.8 percent); transport equipment (8.1 percent); basic metals and metal products (3.6 percent); food, beverages & tobacco (9.7 percent) and rubber and plastic products, other non-metallic mineral products (2.8 percent). Exports rose mostly to the US (20.6 percent).

In conclusion, the American market still represents a great opportunity for Italian entrepreneurs to this day, for different product sectors. There’s always more to do but for the many companies who are investing in the US, with the help of a good trustworthy partner and following the right steps, won’t lead to regrets. On the contrary, they should grow revenue and profits in the US and elsewhere, no matter how the geopolitical winds blow. The internationalization strategy, however, requires prior study that must be done with a reliable partner, who knows the American market and its dynamics and who can define all the steps of a correct entry strategy.

Are you thinking of internationalizing your business in the United States and want to know what are the first steps to take? Click on the image below and read our in-depth study "Internationalizing your business in America: an overview". Inside you will find an overview with the key information on the American market.



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