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Global Scale by Coletta Kemper Exalting Exports

Exports can turn you into an optimist about this economy.

By  Coletta Kemper

A New Year usually makes me feel optimistic. In this grim economy, optimism is hard to come by. But as I was riding to work one morning after meeting with my financial planner and receiving the not unexpected bad news on my investments, I heard a radio story that helped renew my optimism about the future. A man was talking about his grandmother and how her wisdom helped shape his life. She had told him that if you only focus on the bad, the good will pass you by.

With that in mind, let me dispense with the bad news and quickly move on to a more positive note.

A report from the International Chamber of Commerce (ICC) and the Ifo Institute for Economic Research says the world economic climate will remain in a recessionary period in the first half of 2009. A Reuters poll of leading world economists predicts much of the same—the world is likely to be in recession for another year. On top of that, the fear of deflation is troubling economists even more than inflation. A sustained decline in consumer prices will be traumatic for the economy and much tougher to deal with. Businesses may have to lay off more workers and may not be able to pay lenders or shareholders. That, in turn, could prolong the recession.

For the insurance industry, Fitch Ratings predicts that premium growth will be slow in 2009 because of competition and the ongoing recession. Fitch doesn’t see a hard market in the near term, except in hard-hit areas, such as property-casualty reinsurance, professional liability for financial institutions and coastal property.

Ever the optimist, J. Hyatt Brown, chairman and CEO of Brown & Brown, says he is no less optimistic about the future than before, but the economy, he says, is the “joker in the deck” and 2009 is going to be difficult.

The ICC did see one bright spot on the horizon: world trade. The organization reported that it was encouraged that the leaders of the G-20 countries who met in November rejected protectionism and agreed to try to reach a successful conclusion to the world trade negotiations.

It will be an uphill battle, but I’m optimistic. While world trade has slowed, it is still the engine that keeps the global economy chugging. The Commerce Department says U.S. merchandise exports grew 19.1% during the first seven months of 2008—up more than $100 billion from the same time in 2007.

Interestingly, more than 97% of U.S. exporters are small or medium-sized enterprises with fewer than 500 employees. There is a similar trend in other developed and developing countries. Open markets and the Internet have made it possible for small and medium-sized businesses to sell their products worldwide. They are looking at exports as a way to make up for a slowdown in domestic sales.

As insurance brokers struggle to maintain their own profitability, many are also grappling with constriction in their clients’ business. Clients are facing layoffs, cutting costs, shutting down facilities and looking for ways to survive. Brokers provide a lot of value to clients by helping them manage their risks, but it isn’t often a broker can do something to help their clients’ businesses grow.

That’s why I am recommending a book published by the Commerce Department that every broker, whether in the U.S. or abroad, should think about sending clients as a renewal gift. A Basic Guide to Exporting is aimed at helping companies, whatever their size, go global. The recently updated guide is a step-by-step manual that discusses financing options, how to identify the best overseas markets, and how to create a Web site for selling goods to international buyers. It contains 17 chapters on the nuts and bolts of the export process, as well as case studies of how companies have profited from international sales.

FedEx chairman Frederick Smith plans to use the book as a text for a series of nationwide seminars called Exporting 101. At $19.95, the book is a bargain—and a good way to add value for your clients. (Besides, the U.S. Treasury can really use the money right now.) Order the book at www.export.gov/basicguide.

Optimists are said to be more practical reformers. I hope so. We have an optimistic new president who comes into office with the weight of the world on his shoulders, but who offers hope to millions.

As Hyatt Brown says, 2009 will be tough, but the future is bright.

Kemper is The Council’s vice president of Industry Affairs.
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