Bloomberg Línea — Exports from Latin America and the Caribbean grew by only 2.9% in first quarter compared to the same period in 2022, when a year earlier they had increased by 16.4% year-on-year in the same period.
The data is more worrying when disaggregating and looking at some sub-regions and countries: in South America, for example, export values fell 0.3% year-on-year in the first quarter, when a year earlier they had grown by 16.2%.
There were some countries that had sharp declines. Argentina exported a 17.9% drop between January and March, while Bolivia’s exports dropped 23.5% during the period compared with a year earlier.
In Venezuela, meanwhile, exports fell by 20.2%.
On the other hand, in Brazil and Mexico, the two main Latin American economies, export values did grow, although at a slower rate than 12 months ago: Brazil exported 4.8% more between January and March 2023 than between January and March 2022, although last year the increase had been 19% year on year.
Likewise, Mexico saw its exports grow by 6.8%, while in 2022 the increase had been 16.9%.
Countries from which exports grew
In these countries, exports grew in the first quarter of this year compared to the first quarter of the previous year:
- Barbados: 6.5%
- Brazil: 4.8%
- Chile: 10.7%
- Costa Rica: 14.1%
- Guyana: 89.5%
- Mexico: 6.8%
- Nicaragua: 5.8%
- Paraguay: 23.4%
Countries from which exports declined
In these countries, exports declined during first quarter compared with Q1 2022:
- Argentina: -17.9%
- Belize: -20.6%
- Bolivia: -23,5%
- Colombia: -4.7%
- Ecuador: -7.7%
- El Salvador: -4.6%
- Guatemala: -4.8%
- Honduras: -3.7%
- Peru: -4.8%
- Dominican Republic: -1.5%
- Uruguay: -3.5%
- Venezuela: -20.2%
Reasons for the decline
According to a report by the Inter-American Development Bank (IDB), between January and April 2023, the prices of the main commodities exported by Latin America and the Caribbean showed marked volatility.
The year-on-year variation rates were negative for oil prices (-18.2%), coffee (-12.6%), iron (-11.9%), copper (-11.1%) and soybeans (-5.2%). Sugar, on the other hand, recorded a year-on-year increase of 15.1%.
The study states that “the greatest adjustment in prices occurred in the first quarter”, but forecasts that, “during the rest of the year, prices will remain substantially stable, at historically high levels”.
However, it specifies that “the forecast is characterized by the presence of risks of different nature, in a framework of uncertainty about the evolution of interest rates and the dollar rate that usually have direct consequences on the prices of commodities”.
The IDB concludes at the end of the study that, in the context of the sharp slowdown in the economy and world trade, exports of goods from Latin America and the Caribbean grew 2.9% year-on-year in the first quarter of 2023, after expanding 16.4% in 2022.
Although it highlights that “the region’s export performance was better than the global average, given that in February world trade had already entered a phase of contraction”.
What is the medium-term forecast?
According to the IDB report, although global inflation has cooled, rates are still historically high in most countries, which motivates the foreseeable persistence of restrictive measures and risks for the real economy and the financial sector.
“In this context, a further slowdown in growth, particularly in the United States, could affect the mainstay of the region’s exports at the current juncture,” the document states.
It also warns that the growth trajectory of China, a key expansion factor for trade in the South American sub-region, is significant.
The IDB also notes that the economic impact of the modification of the zero-Covid policy in China contributed to the slight rebound in demand during the first months of the year. However, the effects of the opening began to dissipate with the consequent uncertainty regarding the impact on real demand, as well as the effect it may have on the prices of several raw materials for which the Asian giant has the largest global demand.