Outlook Mixed Among Markets Beyond U.S.

Economic growth in foreign countries will be expanding to an almost average rate in 2003 and 2004. However, foreign economies will not expand as quickly as the United States. The largest U.S. markets for goods and their associated printing and packaging—including Canada, Mexico, Europe, and Asia—all will experience a significant pickup in growth next year after steady growth in 2003.

Beset by an overpriced currency, European countries using the euro currently suffer from the weakest economies, especially Germany and the Netherlands. Also suffering are the SARS-affected countries of Asia, especially Hong Kong and Taiwan.

Today's strongest economies currently are relatively new and small buyers of U.S. products, such as China and Eastern Europe. Since China's currency is pegged to the U.S. dollar, it has realized a 9% additional competitive cost advantage in exporting as the dollar has rapidly depreciated. Eastern Europe is taking business from high-cost Germany.

Gross Domestic Product forecasts underestimate the market potential for higher exports. In fact, dollar depreciation will increase U.S. share in foreign markets, particularly in Europe. However, the full impact of the depreciation to date will not be realized until next winter.