After falling 1% in 2023 in a context of contraction in world trade, regional exports of goods will recover in 2024, the Economic Commission for Latin America and the Caribbean (ECLAC) said today when releasing a new edition of its annual report on foreign trade in the region.
The report International Trade Outlook for Latin America and the Caribbean, 2024: Reconfiguration of global trade and options for regional recovery It was presented today at a press conference by the Executive Secretary of ECLAC, José Manuel Salazar-Xirinachs. According to the document, the value of the region’s goods exports will grow by 4%, as a result of a 5% volume expansion and a 1% drop in prices. For imports, a 4% increase in volume and a 2% drop in prices are projected, resulting in a projected 2% increase in value.
By sector, the largest projected increase in value terms will occur in agricultural exports (11%), followed by mining and oil (5%) and manufacturing (3%). By subregions, the largest increases are projected to occur in the Caribbean (23%) and South America (5%). The high figure for the Caribbean is mainly explained by the notable increase in the volume of oil shipments from Guyana and Suriname. In South America, the increases in the exported volume of agricultural products such as soybeans, corn and wheat stand out. The projected increase in the value of exports from Mexico and Central America—more intensive in manufacturing—is below the regional average (2% and 1%, respectively). By partners, increases in exports are projected to China (6%), the United States (4%) and the European Union (3%); On the contrary, intraregional exports would fall 5%. With this, the intraregional trade coefficient would fall from 14% in 2023 to 13% in 2024.
On the other hand, ECLAC projects that the value of regional exports of services will increase by 12% in 2024. This is the fourth consecutive year in which they have grown at double-digit rates, driven mainly by tourism and modern services provided digitally. In contrast, growth of only 1% is projected for regional imports of services in 2024, in line with the low dynamism of economic activity.
Despite the recovery of regional exports of goods and services, the report warns that the great challenge of diversifying them and making them more knowledge-intensive persists. The complexity of this challenge is even greater in a global context in which geopolitical tensions and growing protectionism call into question the type of globalization that has prevailed in recent decades, he adds.
“The implementation of productive development policies with a cluster approach, and based on close public-private collaboration and a sustained effort over time, appears as an ideal mechanism to advance in that direction, as well as to competitively position the region in the face of the ongoing reconfiguration of global value chains,” says the Executive Secretary of the United Nations regional body, José Manuel Salazar-Xirinachs.
In its second chapter, the ECLAC report addresses the role of trade in food security in Latin America and the Caribbean. It points out that the successive crises that the world economy has suffered in recent years have caused setbacks in the achievement of goal 2.1 of the Sustainable Development Goals: by 2030, end hunger and ensure access for all people to a healthy, nutritious and sufficient diet throughout the year.
According to the document, in Latin America and the Caribbean, 41 million people (6.2% of the regional population) suffered from hunger in 2023 (4.7 million more people than in 2019). The prevalence of hunger in the Caribbean (17.2%) is triple that recorded in South America (5.2%) and in Central America and Mexico (5.8%). In 2023, 30.3% of adult women in Latin America and the Caribbean suffered moderate or severe food insecurity, 5.2 percentage points more than men. Likewise, food insecurity hits the rural population (32.2%) more than the urban population (26%).
In this sense, international trade plays a crucial role in food security. Imports provide access to food whose local production is impossible or too expensive due to climatic conditions or insufficient availability of land or technology. Likewise, they can supply local production in the event of temporary shocks such as plagues, conflicts or extreme weather phenomena. On the other hand, the income generated by exports can be used to purchase food.
Latin America and the Caribbean is the main net food exporting region worldwide. Its food shipments reached $349 billion in 2022, its all-time high. South America explains the bulk of regional exports and surpluses, while the subregion of Central America and Mexico has a slight surplus and the Caribbean registers a persistent deficit. The value of food imports exceeds 20% of total exports of goods and services in 15 countries in the region, of which 12 belong to the Caribbean.
ECLAC maintains that strengthening regional integration is essential for a more stable and lower-cost regional food supply. On the one hand, an integrated regional market expands the supply of food and inputs from nearby sources, reducing exposure to disturbances in supply from third markets. On the other hand, greater regional integration favors the creation of productive chains that promote economic and social development through the generation of employment, thus contributing to greater food security.
To strengthen the contribution of trade to food security in the region, the report recommends progress in the following areas: 1) facilitation of food trade (full implementation of single windows, streamlining border inspections, etc.); 2) harmonization or mutual recognition of sanitary, phytosanitary and technical regulations; 3) improving food trade logistics, especially in the Caribbean; 4) strengthening the network of trade agreements between countries and groups in the region; and 5) coordination in multilateral forums.
In its third chapter, the ECLAC document examines the potential of services to boost regional exports. In a context of stagnant per capita income in Latin America and the Caribbean in the last decade and low growth in the volume of its exports of goods (1.6% annually in the same period), exports of services could be a new growth engine of the external sector. In 2023, regional service exports reached $221.7 billion, surpassing their pre-pandemic level. However, services represent only 14% of the region’s exports of goods and services, below their weight worldwide (25%).
Prominent service sectors include tourism, transport and modern digitally delivered services. The latter had their greatest participation in MERCOSUR exports (59%) and the smallest in shipments from the Caribbean Community (CARICOM) (10%). Tourism is the main export of services in all subregional groupings except MERCOSUR.
The report concludes that to take advantage of the high growth in global demand for modern services, Latin American and Caribbean countries should strengthen productive policies in collaboration with the private sector. Among the priority areas are improving the measurement of trade in services, strengthening the digital and language skills of the population, closing digital infrastructure gaps, and implementing programs aimed at promoting exports of services and attracting foreign direct investment (FDI). The latter is key to bringing new technologies, improving productivity and generating clusters and value chains around services.
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