The increase in international prices of raw materials played a crucial role in the recovery of exports from the Southern Common Market (MERCOSUR) in 2021, which even exceeded their 2019 level. However, even with historically high prices in the In the context of the war in Ukraine, the weak performance of the volumes exported by the bloc and its ever-decreasing diversification should not be lost sight of, the Economic Commission for Latin America and the Caribbean (ECLAC) points out in a new document released today. .
In its new edition of the Mercosur Foreign Trade Bulletin: “Overcoming the coronavirus disease (COVID-19) pandemic and challenges of the war in Ukraine”, ECLAC highlights that MERCOSUR experienced a recovery in economic activity from 5 .8% in 2021 (4.0% if Venezuela is included), thanks to a successful vaccination campaign that allowed, even with a shocking rise in COVID-19 cases, to sustain activity levels higher than those of the previous year .
As reported by the United Nations regional body, MERCOSUR exports increased by 35.6% in 2021 and exceeded their 2019 level by more than 20%, driven by the jump in raw material prices, while volumes exports returned to their pre-pandemic growth trend, lower than that of the rest of the world.
Meanwhile, imported values also grew significantly and exceeded 2020 levels by 40%, driven by the recovery of economic activity in the bloc’s countries and the purchase of medical supplies to combat the pandemic, which increased the volume of imports. external purchases by 23.2% in the year (13.2% compared to its pre-pandemic level). Higher international prices, in particular for fuels, explained the rest of the increase, says the document.
According to the report, foreign trade in services recovered at two speeds: transport, linked to trade in goods, and “modern” services, gradually returned to their pre-pandemic levels, while tourism barely reached a quarter of its value. of 2019.
In the study, ECLAC confirms that MERCOSUR held a total surplus position of 56.8 billion dollars in 2021 and that the rises in international prices, accentuated by the war in Ukraine, will have a differentiated impact on the countries of the bloc, with a probable improvement in the terms of trade for Brazil and Argentina, and less predictable effects for Paraguay and Uruguay.
The Commission warns that beyond the circumstantial increase in prices, the growth rate of MERCOSUR exports is structurally weak. The bloc has lost participation in international markets, particularly in the manufacturing sector (export losses of 6.7% of GDP are estimated in 2012-2019), has suffered a growing commercial and productive disintegration, and tends to concentrate on the export of products of primary origin (80% in 2021).
In this way, the primary specialization of the countries of the bloc conditions their export dynamics and their growth in the medium and long term. For this reason, a redefinition of MERCOSUR’s export strategy that promotes more diverse external production and sales and more complex goods and services (and less fluctuating prices) becomes increasingly necessary, emphasizes ECLAC.
He adds that the urgency of advancing towards national productive and technological policies that dialogue on a common regional agenda is twofold, in a context in which the most advanced countries turn to increasingly introverted and/or regionalized productive strategies. The MERCOSUR countries cannot be left behind and must strengthen their ties with each other and with the other countries of the region, indicates the organization.
The main challenge for MERCOSUR to build this common agenda lies in finding consensus solutions that allow it to meet the different (and frequently contrasting) demands of its productive sectors and thereby advance mechanisms that promote greater integration, ECLAC finally points out in this report .
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