Is a Strong Dollar Good or Bad for the Capital Region Economy?
The US dollar hit its highest level in decades against several other major currencies this month experts say This strength could continue into next year. As with most economic trends, there will be winners and losers.
The capital region’s petrochemical sector could take a hit as its exports will be more expensive and potentially more difficult to sell in foreign markets, notes Stephen Barnes, economist at UL Lafayette, a member of the state government’s Revenue Estimating Conference. However, industrial customers struggling with supply chain challenges may be more than usual willing to pay higher prices to get what they need, he adds.
Benefits include cheaper imports, which is helpful for consumers and businesses using imported goods and materials. Americans will find it cheaper to travel internationally, but foreigners will find it more expensive to visit popular US destinations like New Orleans.
Whether the strong dollar is good or bad for Louisiana’s economy as a whole may depend on how strong it stays and for how long, Barnes says.
“This is really positive for foreign direct investment [in the petrochemical sector]said Andrew Fitzgerald, senior vice president of business intelligence at the Baton Rouge Area Chamber.
Foreign companies doing business here are paid in US dollars, which strengthens their balance sheets, Fitzgerald says. The strong dollar is unlikely to significantly dampen demand for US energy exports like LNG as there aren’t many options, he adds.
“I would say that we are in a unique position, both geographically and in terms of our industry, to be more on the positive side of the ledger in southern Louisiana,” says Fitzgerald.
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