Europe's financial flu is giving the rest of the world a cold, and U.S.
companies, including those in Virginia, are feeling it.
Six of the 17 nations that use the euro currency are in recession as Europe's debt crisis has worsened in the past few months.
In the U.S., corporate profits have been one of the few bright spots in a lackluster economic recovery and exports had been a strong force in the recovery.
Yet the deteriorating financial condition in Europe has been weighing down some U.S. companies' profits.
Some Richmond-based companies with significant international business, including packaging maker MeadWestvaco Corp. and fuel additives maker NewMarket Corp., have cited softness in the European market as a concern, though their earnings have not been heavily affected.
For instance, MeadWestvaco said demand of folding cartons for personal care products in Europe has slowed.
Virginia has a "moderate risk" from a European recession, according to a report in July from Wells Fargo Securities.
Financial woes in Europe are taking a toll on exports from Virginia to Europe, which fell 7.8 percent in 2012's first quarter from the same period a year ago, according to the Virginia Economic Development Partnership.
"There are some sectors (in Virginia) that are affected" by the international slowdown, said Terry Rephann, regional economist for the Weldon Cooper Center for Public Service at the University of Virginia.
Exports "are one of the pistons that has been driving what has been a slow recovery and, if we lose that, then it could be troublesome."
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Total exports to Europe in the first quarter of 2012 were $1.07 billion, down 7.8 percent from $1.16 billion in the same period of 2011, data from the Virginia Economic Development Partnership show.
About 24 percent of Virginia exports were to the European Union, compared to almost 17 percent to Canada and more than 10 percent to China, according to research by the Federal Reserve Bank of Richmond drawn from sources including the Census Bureau and Haver Analytics. Most of the exports to the EU were to the United Kingdom and Germany.
"Coal is a big export and petrochemicals, computer and electronic equipment and transportation equipment components. There are some manufacturing sectors that would be impacted," Rephann said.
Virginia may be in a better position to weather a slowdown in Europe than many other U.S. states, such as the Midwest, where manufacturing is more export dependent, Rephann said.
"In Virginia, since we are oriented so much toward government and services, we have a much smaller manufacturing economy and we have got less exposure in terms of exports than a lot of other states," he said.
The down quarter came after exports to Europe for all of 2011 rose slightly to $4.39 billion from $4.34 billion in 2010. The figures were lower than the nearly $4.6 billion in exports in 2009 and $6.3 billion in exports in 2008.
The total impact of Virginia's global trade is difficult to measure precisely, because much of what moves through the state's ports originates in other states, blurring the numbers, Rephann said. Also, Virginia businesses
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