Exports of goods from Latin America and the Caribbean increase 20% in 2022, although they grow less than the previous year

The Economic Commission for Latin America and the Caribbean (ECLAC) estimates that the value of regional exports of goods grew 20% in 2022, driven by a 14% rise in prices and a 6% expansion in the volume exported. This is stated by the United Nations agency in a new annual report (flagship) released today through a press release.

in the report International Trade Outlook for Latin America and the Caribbean 2022, the Commission also indicates that the value of regional imports of goods increased by 24%. As in exports, the bulk of the increase in the value of regional imports is due to the price component.

According to the report, regional exports of goods had their second year of growth at double-digit rates in 2022, after growing 27% the previous year. However, as in 2021, the expansion of shipments was mainly driven by exogenous factors (the rise in the prices of raw materials, particularly fuels), and not by the ability to increase the volume exported or to diversify the regional export offer to new sectors.

In contrast to the slowdown in trade in goods, trade in services in the region shows a significant recovery, growing 45% in the first half of 2022 compared to the same period in 2021. This is mainly due to the reactivation of tourism, followed by the category of other services, which include the so-called modern services.

The report warns that in a context marked by the conflict in Ukraine, high inflation, lower growth, geopolitical tensions and the persistence of the pandemic, world trade suffered a sharp slowdown in 2022, which will worsen in 2023: after expanding 9 .8% in 2021, the volume of world trade in goods is projected to grow 3.5% in 2022 and grow just 1% in 2023.

Among the main trading partners of the region, it is estimated that exports to the European Union were the most dynamic in 2022, with a growth in value of 26%. For the first time since 2015, exports to China were the least dynamic, growing only 8%. Meanwhile, it is estimated that intraregional trade expanded by 22%, which is good news for manufacturing exports in the region.

According to the report, the largest estimated increases in exports were registered in countries that export hydrocarbons: Trinidad and Tobago (69%), Venezuela (63%), Colombia (49%) and Guyana (45%).

On the other hand, 25 of the 33 countries in the region suffered a negative shock in their terms of trade in 2022; that is, the price of the products they import increased more than that of the products they export. This situation reflects the rise in the prices of food, fuel and fertilizers since 2021, which worsened in 2022 as a result of the conflict in Ukraine. The only countries that had a positive impact on their terms of trade are the net exporters of fuels.

In its 2022 version, International Trade Outlook includes a chapter that examines the export performance of manufactures in Latin America and the Caribbean in the period 1990-2021. According to the report, the region as a whole shows a weak export performance in the field of manufactures: after increasing slightly between 1995 and 2001, the regional participation in world exports of manufactures has not exceeded 5% in the last 20 years. In addition, the region has a persistent and growing trade deficit in manufacturing, which went from representing 3% of GDP in 1995 to 6% in 2021. Latin America and the Caribbean only has significant surpluses in the automotive and food and beverage sectors. and tobacco, and its manufacturing exports show a high concentration by origin: a single country (Mexico) represented 57% of the total between 2019 and 2021.

The report adds that the COVID-19 pandemic and the conflict in Ukraine have highlighted the regional high dependence on external supply of strategic products such as medicines, medical devices and fertilizers. “For this reason, it is urgent to revitalize regional integration and implement policies to promote production to boost manufacturing exports,” ECLAC indicates in the study.

“Given its great importance for manufacturing exports, it is necessary to move towards a broad and stable regional market through regulatory convergence initiatives, trade facilitation, strategic use of public procurement and improved connectivity,” he emphasizes.

Likewise, productive promotion policies are required that aim to increase export competitiveness in all segments of manufacturing value chains, including service activities associated with them (research and development, design, logistics, etc.), stresses the organization United Nations region.

Finally, in its third chapter, the ECLAC report examines the profound disruptions in maritime supply chains -which mobilize 80% of the volume of world trade in goods- since the start of the pandemic. The massive closures of productive activities, the increased congestion in ports and the limited availability of containers, added to the high concentration of the shipping industry, have resulted in a shortage of imported final goods for consumption and inputs and capital goods. imported for production; the loss of reliability of shipments; and an increase in inflation due to higher transportation costs.

One of the main effects of these disruptions has been the notorious increase in the price of ocean freight. For example, the cost of transporting exports from the region to the United States in June 2022 was four times higher than that of January 2019. For its part, the cost of transporting imports from Asia is currently 4, 3 times higher than the value of January 2019.

ECLAC maintains that global supply chains by sea are key to advancing towards sustainable development in the region. Here, Latin America and the Caribbean faces a double challenge: on the one hand, it is necessary to overcome the lag in infrastructure and interconnectivity and, on the other, it must face the impacts that, in the current situation, threaten to reconfigure the structure of international trade in terms of routes, actors and interests for the years to come.

“The coordinated channeling of public and private resources, through Public-Private Associations (PPP) can contribute to advance new projects and improve the existing infrastructure that the region demands. It is necessary to give way to APPs that put the interests of people first and that are in line with the Sustainable Development Goals”, the report indicates.