High demand for oil and other natural resources pushed the state's economy to new heights in 2005, and the trend should continue in 2006, an Anchorage economists predicted Jan. 18, at an Anchorage luncheon for World Trade Center Alaska.
Pat Burden, president and chief economist for Northern Economics Inc., said higher prices for those resources, including oil prices - which averaged $54 a barrel in 2005 - are likely to push Alaska's gross state product over the $40 billion mark, just a scant three years since the GSP hit $30 billion. GSP is the value of all the state's goods and services.
That increased economy, particularly in the area of natural resources, will likely bring more jobs. An estimated total of more than 447,000 jobs are expected in 2006, up from 436,000 a year ago, according to Burden's calculations.
The outlook for overall Alaska earnings, meanwhile, would rise from $21 billion in 2005 to $23 billion in 2006, with the greatest increase, 9.4 percent, in natural resources, he said.
BP Exploration (Alaska) Inc. is adding 200 people, and the Pogo Mine is opening this year too, Burden said. Pogo itself will account for a good number of high-paying jobs, he said.
Burden noted the huge amount of liquidity generated in the Alaska economy in 2005, a surge of cash that flowed from the price of oil, and increases in the prices of lead, zinc, gold and other precious metals, in addition to the federal funds plugged into the state economy.
"There was a substantial volume of money generated in 2005, and it will be used for investments (by Alaska businesses) in 2006 and 2007," he said. "It's going to be a very, very buoyant economy, and one item we will be concerned about is are there enough bodies to do all the work people want done."
Burden noted the latest state labor department statistics, which show that Alaska's unemployment rate is currently the lowest in the nation,
Greg Wolf, executive director of the World Trade Center Alaska, noted that about $3.2 billion of the $30 million in gross state product for 2004 came from Alaska exports to worldwide markets.
That figure does not include the state's export of services, such as construction, engineering and oil and gas services.
"There is no paper trail required from government on such services," Wolf said. "With commodities exports there are export documentations to be completed, but for services it is more anecdotal."
That $3 billion influx of foreign money to the state's economy results in thousands of direct and indirect jobs, and a stronger, more diversified economy, Wolf said.
For some Alaska companies, their best bet for growth is in overseas markets, he said. Another plus is that those export-related jobs also typically pay 13 percent to 16 percent more than jobs tied solely to the domestic economy, according to a U.S. Department of Commerce survey, Wolf added.
Wolf also noted that on a per capita basis, Alaska ranks fourth in the nation in international trade.
A third economist, Sanjiv Sanghvi, chief executive of Wells Fargo HSBC Trade Bank in San Francisco, noted that from a historic perspective, the economic growth in China and India is something that all should be celebrating. Both countries have a growing middle class, Sanghvi said.
While there has been extensive outsourcing of services to India, the dislocation of U.S. jobs should come to an end in five years, as major businesses are there to provide for the untapped needs of Indian consumers, he said. China, meanwhile, is a growing export market for Alaska, replacing Canada as Alaska's third largest export market, and ranking third behind Japan and Korea for the first 10 months of 2005, Wolf said.
Japan consumed 32.8 percent of Alaska exports, while the Korean Republic took 19.2 percent, China had 9.8 percent, Canada took 6.5 percent, and Germany had 5.2 percent, he said. The value of those exports from January through October in 2005 totaled $1.04 billion to Japan, $625.8 million to Korea, $320.8 million to China, $211.8 million to Canada, and $170 million to Germany, according to Alaska World Trade Center statistics.
Seafood continues to rank first among Alaska's top export products. For the first 10 months of 2005, wild Alaska seafood comprised 56.3 percent of all exports, followed by minerals, energy, fertilizers and aircraft/spacecraft. The value of those exports was $1.84 billion for seafood, $475 million for minerals, $268 million in energy, $241.6 million in fertilizers, and $143 million in aircraft/spacecraft. The aircraft and spacecraft category saw the most dramatic increase, up from $9 million a year earlier, statistics showed.
