As the current recession winds down on the national scene, retail, education and health services continue to drive the local economy to the forefront of economic recovery, according to economists in the region.

Dr.Gökçe Soydemir, professor of finance at the University of Texas-Pan American, presented the university’s 2010-2011 Business Outlook and Forecast for the South Texas Border Region at a luncheon on May 13.

The report is UPTA’s sixth annual forecast meant to gauge past, present and future trends of the local economy. The current report also measures the impact of the current recession in the region.

Referencing the report, Soydemir said while financial turmoil has had an effect on consumption and spending nationwide, retail sales, education and health services employment will continue to be the areas where the South Texas border economy has a competitive advantage over other areas of the nation.

“Even though South Texas’ economy performed well below its long term average, the extent of the slowdown has been much less than the U.S. nationwide,” Soydemir said. “Forecasts indicate that nationwide, there will be an initial improvement followed by a slight worsening of the economy, only later stabilizing into a steady rate of growth.”

On a local level, retail sales, education and health services employment will continue to be the areas where the South Texas border economy has a competitive advantage, Soydemir said. These sectors “display consistent growth, even during the most recent recession, but at a slower pace than 2008 and the 10-year long term averages,” he said.

Schools and hospitals continued to employ nearly 30 percent of all employment in South Texas. These are areas that have experienced growth of about 7.7 percent over the last 10 years. Projections foresee an increase of about 4.92 percent in 2010 and 4.07 percent in 2011, according to the report.

The McAllen-Edinburg-Mission MSA reached a 10-year average employment growth of 4.2 percent. Texas registered a ten-year long-term average growth of 1.35 percent. Economists at UTPA anticipate an increase in average employment of about 1.21percent in 2010 and 1.6 percent in 2011.

“Relative to state and the nation, the extent of this slowdown will be at a much lesser degree because of the mitigating effect of the Mexican consumers,” Soydemir said, even though border crossings, through increasing declines, however is becoming a concern. “The recovery has to spillover to Mexico before the South Texas economy can absorb the full impact of the economic rebound,” Soydemir said.

Total border crossings decreased at a rate of 1.32 percent in 2008, according to the annual forecast. Besides the economic downturn, Mexican border consumers also faced currency depreciation and violence in 2009.

These events possibly discouraged tourism in, and out of that country contributing to a nearly 8 percent decrease of border crossings over the last year. The forecast calls for a decline of 4.1 percent in 2010 and 4.3 percent in 2011.

Some highlights from UTPA’s report include:

Manufacturing has declined at an average of 6.17 percent over the last 10 years. At worst time of the recession in 2009, manufacturing employment decreased at a rate of 12.7 percent. Over the next two years, the average manufacturing employment will revert to its average, minus-6.5 percent.

Retail Sales employment: In 2009, this sector took a hit, about a 1.7 percent decline. Retail employment however is projected to grow by 1.85 percent over the next two years.