Greater integration into international trade and global value chains in Latin America and the Caribbean could boost economic growth, said this Thursday (10.10.2019) the World Bank in his most recent report semi-annual report on the situation in the area.
«After rapid growth due to high commodity prices in the first decade of the 21st century, the region is now in a stage of underperformance."said Martín Rama, chief economist for Latin America and the Caribbean at the World Bank.
«The years of high commodity prices are clearly behind us. We must now Focus on areas such as trade integration to boost the region's productivity"Rama added in the report entitled "Trade integration as a path to development?"
In this regard, the report highlighted that the Treaty between Mexico, the United States and Canada (T-MEC) and that of the European Union (EU) with the Common Market of the South (Mercosur), negotiated over the course of the last year, represent opportunities for greater trade integration.
In a statement, the World Bank indicated that both agreements can have considerable positive effects on growth, although it considered that Their social and environmental impact must be considered.
It is anticipated that the Gross domestic product of Latin American and Caribbean countries (excluding Venezuela) will grow by 0.8% in 2019 and 1.8% next year, according to the report, which noted that short- and medium-term expectations are not very encouraging.
The World Bank estimates that Argentina's recession will deepen before recovery begins, while the slowdown in Mexico could continue.
The report also highlighted that trade tensions have benefited several countries in the region, such as Mexico, which surpassed China as the United States' top trading partner, while in that Asian country, Brazil is taking market share away from US soybean exporters.
The World Bank highlighted that for decades, countries in Latin America and the Caribbean focused on preferential trade agreements to boost their international integration, but most of these agreements were intraregional.
"TAll preferential trade agreements lead to a higher level of bilateral trade, but only South-North agreements can increase the economic complexity of the signatory developing countries."Rama said.
«South-South agreements raise growth rates only marginally, while South-North agreements have a significant impact on growth.", added the World Bank official.
Likewise, Rama indicated that the negative side effects associated with greater trade integration require territorial policies by countries to correct imbalances to contain the damage in the region.
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