Exports of goods from Latin America and the Caribbean fell sharply in the first quarter of the year, due to both lower commodity prices and weaker export volumes, the Inter-American Development Bank (IDB) said on Thursday (08.06.2023/XNUMX/XNUMX).
Between January and March, the value of the exports of the region grew 2,9% compared to the 16,4% expansion it had registered in the same period of 2022, the IDB explained in its latest «Estimates of Trade Trends in Latin America and the Caribbean«.
“The post-COVID expansionary trade cycle has ended and the region has settled into a slowing trend in exports that is set to continue in the next quarter and stabilize in the second half of the year,” said Paolo Giordano, Principal Economist of the IDB's Integration and Trade Sector and coordinator of the study.
“As a result, policies and investments aimed at promoting competitive insertion in foreign markets will be key to supporting economic recovery," he added.
According to IDB estimates, the slowdown was widespread throughout the region.
In South America, exports fell by 0,3% in the first quarter of 2023 compared to the same period in 2022, after having grown by 16,2% on average the previous year. All South American economies recorded a drop in sales, with the exception of Paraguay (23,4%) and Chile (10,7%).
In Mesoamerica, which includes Mexico and Central America, sales increased by 6,3%, after having grown by 16,1% in the same period of the previous year. Mexico had an increase in sales of 6,8%, contributing to sustaining the regional performance.
The Prices of several commodities exported by Latin America showed marked volatility in the first quarter of 2023.
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%). The increase was for sugar (-15,1%).
In terms of volumes Latin America's exports registered an increase of just 1,6% year-on-year, after increasing 5,4% in 2022, the report said.
As we said, Mexico's exports grew (6,8%). The main driver of the expansion of external sales was the United States. Meanwhile, Central American shipments expanded by just 1,6% year-on-year in the first quarter of 2023.
In contrast, South American export volumes fell by 1,9%, with the exception of Chile and Paraguay. These two economies and Brazil were the only ones in South America where exports grew year-on-year and, in addition, were characterized by having shown a positive rate of change in volumes shipped.
The imports Latin America and the Caribbean also slowed down in the first quarter of 2023, registering 0,6% compared to 21,1% in 2022. Even so, the IDB estimates a slightly higher increase in intraregional imports than in total external purchases (8% and 0,6% year-on-year, respectively) in the first quarter of 2023.
In this weak context, the IDB stressed that “boosting growth through international trade will be essential to overcome the succession of crises that have affected the global economy in recent years.” (Latin America and the Caribbean Trade Trends Estimates – 2023 Edition: Q1 Update)
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