By: Staff Writer
January 20, 2023
The Economic Commission for Latin America and the Caribbean (ECLAC) in their recent report, International Trade Outlook for Latin America and the Caribbean, said that the value of exports for the region grew by 20 percent year on year in 2022.
Double-digit growth in intraregional exports was recorded in almost all sectors, including chemicals and petrochemicals, oil and mining, wood, pulp and paper, non-electrical machinery and equipment, and automobiles.
The report added: “The largest increases in export value are projected for Trinidad and Tobago, the Bolivarian Republic of Venezuela, Colombia and Guyana. All these countries are net hydrocarbon exporters that have benefited from higher hydrocarbon prices in 2022.”
For 2022, ECLAC projects 20 percent growth in the value of regional exports of goods, driven by a 14 percent rise in prices and a 6 percent increase in volume. The value of imports is forecast to climb by 24 percent and, as in the case of exports, most of this projected rise also reflects price increases.
The report also said: “The conflict in Ukraine and the global economic slowdown are expected to weigh on the region’s terms of trade, which are projected to deteriorate in 2022, owing to import prices rising more than prices for exported goods. The projected adverse effect on the region’s terms of trade is just over US$ 60 billion. Of the 33 countries in the region, 25 are set to suffer a terms-of-trade shock in 2022; the exceptions are primarily countries that are net exporters of hydrocarbons.”
The report goes on to note that the COVID-19 pandemic and the war in Ukraine have highlighted the region’s heavy dependence on external supply of strategic products like medicines, medical devices and fertilizers. “For this reason, it is urgent to revitalize regional integration and implement policies to encourage production to energize manufacturing exports,” says ECLAC in the report.
“Given its importance for manufacturing exports, we must advance toward a large and stable regional market through initiatives that foster regulatory convergence, trade facilitation, strategic use of public procurement and improved connectivity,” it emphasizes.
While the US, EU and China are still the largest markets for the region, the Russia/Ukraine conflict is expected to put strain on those markets in 2023.
The report also said: “The projected deterioration in the region’s terms of trade would pass through directly to the trade balance. For the region as a whole, a trade deficit of US$ 58bn is projected for 2022, which is US$ 45bn more than in 2021. Mexico, Central America and the energy- and mineral-importing countries of the Caribbean are expected to record trade deficits…
“In short, regional exports of goods will record double-digit growth for the second consecutive year in 2022. However, as in 2021, export growth will be driven mainly by exogenous factors, rather than by the ability to increase export volumes or to diversify regional exports into new fast-growing knowledge-intensive sectors. Also for the second consecutive year, regional imports of goods will grow more than exports, which is unwelcome in a context of rising external financing costs. With regard to trade in services, the region is far more dependent on tourism than the world average, so the slow recovery in the tourism sector means more downbeat outlooks for several economies, especially in the Caribbean.”