video
(30 August 2011) The value of goods exported from Latin America and the Caribbean will grow by 27% in 2011, which is a similar increase to that of last year. According to a report presented today in Santiago, Chile, by the Economic Commission for Latin America and the Caribbean (ECLAC), this growth would result from a 9% increase in the volume of exports and an 18% rise in the price of products exported by the region.
In the study Latin America and the Caribbean in the World Economy 2010-2011 the organization reveals that the value of imports would increase by 23%, with the region accumulating a trade surplus of slightly more than 80 billion dollars by the end of 2011.
ECLAC assures that South-South exchange, headed by China and the rest of emerging Asia, is currently the main driving force of global trade growth, since the volume of exports from developing countries grew by 17% in 2010, compared with 13% in industrialized countries.
The organization stresses that international trade has significantly contributed to economic recovery following the economic and financial crisis of 2008 and 2009. However, it also warns that at present, the complex situation in developed countries, in particular the United States of America and in Europe, is starting to affect emerging nations and could decrease the rate of growth of exports to these markets in 2012. The specific impact of the slowdown will depend on the type of products exported and the markets to which they are directed.
Likewise, lower growth of emerging economies, which would further weaken industrialized countries, should lower international prices of basic products, affecting the trade balances and current account balances of the countries exporting them. Therefore, there is a need to prioritize macroeconomic prudence and forms of regional trade and financial cooperation which can buffer the impacts of an eventual weakening of the international scenario.
"The levels of global volatility and uncertainty are worrying. There are still significant global imbalances, such as the sovereign debt crisis in various European countries and the fiscal uncertainty in the United States of America, which would in turn weaken international trade," stated Alicia Bárcena, Executive Secretary of ECLAC, while presenting the report.
Regional trade balance
Over the past decade, the relative importance of Asia in Latin America and the Caribbean foreign trade increased significantly, compared with the fall in the United States of America participation and the stagnation of the European Union.
Latin America and the Caribbean has become the main destination for exports from the United States of America (receiving 23% of exports in 2010, compared to 22% from Asia and 19% from Canada) and the second most important origin of its imports (19% in 2010, following 34% from Asia). The region represents only 2% of the European Union's total trade, which is significantly below exports between the countries which make up the European Union (64%) and Asia (10%).
Over the last five years, exports from the region to Asia-Pacific grew at an annual rate which tripled that of total exports (22% versus 7%). During the same period, imports from Asia-Pacific have also grown more quickly than total imports (annual rates of 15% versus 9%, respectively). Likewise, Latin America has become China's most dynamic trading partner, with an annual growth of 31% in its exports to the region between 2005 and 2010, compared with 16% to the rest of the world. Exports to Asia are still concentrated in primary products and their basic processing, while those directed to Latin America and the Caribbean, and the United States of America are mainly manufactured based products.
With regard to trade balance, South America maintains balanced trade with China and the rest of Asia, a slight surplus with Europe and a small deficit with the United States of America, while Mexico and Central America have a significant surplus with the United States of America, a deficit with the European Union and bulging deficit with China and the rest of Asia-Pacific.
In the report, ECLAC also states that the United States of America lacks an explicit trade policy towards Latin America and the Caribbean, despite the fact that it is still the region's main partner. For example, since 2007, there have not been greater developments in trade negotiations. This situation contrasts with the dynamism shown by lasting negotiations in recent years between various countries and their European and Asian partners.
ECLAC suggests a new alliance between the United States of America and the region in order to tackle common challenges in the search for better integration in the world economy. The organization states that there are interesting perspectives for cooperation between Europe and the region in areas such as green technology and social business responsibility.
At present, the Latin America and Caribbean region faces the unfavourable situation with important assets: strong growth between 2003 and 2008, strong recovery in 2010 and a significant rate of growth in 2011; a balanced fiscal structure, low levels of inflation and debt, and falls in the level of unemployment and poverty. In a medium-term perspective, its large reserves of natural resources, demographic advantages, growth of the middle classes and market potential place it in an attractive position for improving its negotiation capacity with its main partners. However, it must first overcome various challenges to achieve better international integration.
For example, the revaluation of regional and global alliance strategies to take advantage of South-South trade and investment opportunities, and the creation of a joint approach with Asia-Pacific, in particular China.
Greater productive diversity and inclusive growth must also be achieved. Therefore, some of the measures needed include increasing the value and knowledge component incorporated into exports, diversifying products and markets, insertion into global value chains, improving the governance of natural resources and taking innovation to another level.
ECLAC calls for the countries of the region to increase their negotiation power by taking advantage of regional assets and adopting a common stance on the global agenda on issues such as the Doha Round, climate change and the financial crisis. Finally, it calls to develop open regionalism to improve the supply of regional public goods, in particular, infrastructure, energy, logistics, transport and initiatives for facilitating and financing intra-regional trade.
See also:
- Table: Evolution of Latin America and the Caribbean Foreign Trade, 2009-2011
- Information sheet: South-South exchange is the principal driving force of global trade (in Spanish)
- Presentation by ECLAC Executive Secretary, Alicia Bárcena
The Latin America and the Caribbean in the World Economy 2010-2011 report will be available on the ECLAC website from 30 August.
Any queries should be addressed to the ECLAC Public Information and Web Services Section. E-mail: dpisantiago@cepal.org; Telephone: (56 2) 210 2040.
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