The international framework 2020-22
In 2019, the value of global trade contracted by 2.9% and then fell by 2020% in the first nine months of 10.5. It should be noted that this decline during the first quarter of this year was caused by the effects of the pandemic, which had a major impact on world trade, with a 5.3% drop reflected in foreign trade activity.
However, at the end of 2020, it was forecast that the volume of world trade would increase by 8% for 2021, after having been stagnant due to the pandemic. To date, there is no final forecast. update, but noting that the projections as current forecasts remain in an optimistic commercial scenario, despite the great difficulties in the supply chains and in the face of a possible resurgence of Covid-19 with the new Omicron variant.
The Omicron variant of Covid-19 represents a new threat to global trade, even though companies, especially exporters, have only recently shown signs of recovery in their activities. Many specialists from the World Trade Organization (WTO) say that it would only cause a small shock, given that many governments are better prepared in how to combat this pandemic.
It is important to note that the impacts of this new variant on global trade are not fully under control because this variant was recently reported on November 24 by the World Health Organization (WHO).
For 2021, according to Carlos Juárez, international trade analyst at The Logistic World, global trade demonstrated its resilience in the face of the major impacts generated by the Covid-19 pandemic. In other words, companies and States showed strength, experiencing large increases in imports and exports, well above pre-pandemic levels (Carlos Juárez, 2022).
By the fourth quarter of 2021, the global record was over $28.5 trillion, which represented an increase of 25% compared to 2020 and 13% compared to 2019 (UNCTAD Global Trade Update, 2022).
On the other hand, according to Euler Hermes' Global Trade Report, world trade is projected to grow by 5.4% for 2022 and 4% for 2023, despite the impacts of Covid-19 on supply chains, and will continue to increase until 2023.
According to Françoise Huang, Asia-Pacific economist at Euler Hermes, the United States will record trade deficits of approximately 1.3 trillion dollars in 2022 through 2023, and on the other hand, there will be a trade surplus for the Asian giant: China, of 760 million dollars. Likewise, the Eurozone will record a surplus of about 330 million dollars (Solunion, 2022).
The current national framework
In Peru, since March 2020, when the mandatory quarantine began, many economic sectors have experienced stagnation, especially those in foreign trade.
At the end of October this year, Peru recorded an annual trade surplus of US$13,653 million, thanks to the increase in exports of some mining and agricultural products due to their high prices, among other non-traditional products such as textiles and chemicals, according to the Informative Bulletin of the Central Reserve Bank of Peru (BCRP).
Despite the lockdown in Peru from 2020 to 2021, Peruvian exports as of October 2021 amounted to US$5,676 million, exceeding by 36.5% and 21.1% the same month in 2019 and 2020. It should be noted that this was thanks to high international metal prices.
At the end of 2021, Peruvian exports reached a total of US$56,241 million, 35% higher than in 2020. Along the same lines, it is worth noting that Peruvian products reached 170 markets; the main destinations (markets) were: China (33% of the total), United States of America (13%), European Union (12%), South Korea (5%), Canada (5%), and others (32%), (MINCETUR, 2022).
In addition, the productive sectors achieved surpluses in their exports, such as the metallurgical sector (+75.9%), steel (+74.7%), textile (+68.4%), jewelry (+64.3%), fishing (+34.7%), mining (+33.5%), glass (+32%), forestry (+30.8%), chemicals (+29.4%) and agro-exports (+18%), (MINCETUR, 2022).
Within the traditional and non-traditional agro-export sector, US$ 8,874 million was reached in 2021, setting a new record. The main exported products were: avocados (+39.7%), blueberries (+22%), grapes (+21.6%), mango (+11%), cocoa and derivatives (+10.2%), and asparagus (+3.5%). It is worth mentioning that Peru is increasingly closer to being included in the ranking of the top 10 fruit exporters in the world (MINCETUR, 2022).
It is also important to highlight the 20 regions that grew with respect to this export record: Madre de Dios (+107%), Ucayali (+97%), Huancavelica (+61%), Puno (+59%), Ica (+52%), Apurímac (+46%), Loreto (+46%), Arequipa (+44%), San Martín (+34%), Tacna (+31%), Cusco (+28%), Lambayeque (+27%), Moquegua (+23%), Ayacucho (+20%), Áncash (+19%), La Libertad (+19%), Piura (+18%), Tumbes (+15%) Amazonas (+11%) and Junín (+1%), (MINCETUR, 2022).
At the beginning of 2022, important news emerged and it was that Peru became the world's leading exporter of fresh grapes, at the end of 2021. Fresh grapes reached US$ 1,260 million, an increase of 22% compared to 2020, surpassing Chile (US$ 928 million), the United States (US$ 782 million) and China (US$ 757 million) (PROMPERU, 2022).
Likewise, the good export boom recorded in 2021 continues for the first two months (January-February) of this year. According to the National Superintendence of Customs and Administration (SUNAT), in the first two months of 2022, total exports have registered a value of US$ 8,935 million, 3.3% higher than the same period in 2021, (COMEXPERU, 2022).
On the other hand, the main markets were: China (US$ 2,475 million), United States of America (US$ 1,437 million), India (US$ 463 million), South Korea (US$ 411.3 million) and Japan (US$ 411.2 million), (COMEXPERU, 2022).
The following graph shows the evolution of Peruvian “traditional and non-traditional” exports in the period January-February (US$ millions):
Conclusions
The EFE Agency (2021) indicates that for 2022, Peru is projected to have a growth rate of 3.4% and 3.2% for 2023. This growth rate is also attributed to the historical record of surplus in the trade balance for the current year 2021, this is due to the good performance of exports of some minerals such as their prices. Copper was one of the main most exported minerals, since Peru is the second largest producer of this mineral in the world.
In addition, the head of the Central Reserve Bank of Peru, Julio Velarde, indicated that Peru is the third country in Latin America with the largest international reserves, after Mexico and Brazil. In other words, these reserves represent Peru's international liquidity to be able to face adverse macroeconomic phenomena or shocks (BCRP, 2021).
This boom in the foreign trade sector is possible thanks to the efforts of exporters, farmers, workers and all those involved in the export chain, who have demonstrated their resilience. This has made the foreign trade sector one of the most solid sectors, providing great benefits throughout the country.
Finally, the central government is urged to continue supporting central, regional and municipal authorities to improve management and increase productivity in the workplaces of the public and private sectors, in order to contribute to Peru's economic recovery, especially in the economic sector of foreign trade activities, taking into account that we are still in the context of the Covid-19 pandemic.
Likewise, governments are encouraged and recommended to eliminate or relax trade barriers to facilitate access of products to international markets.
Mayron Wilbert Ponce de Leon Sierra He is a data analyst at the Ministry of Foreign Trade and Tourism. He is a university professor and Commercial Manager of the Marketing Peru Consulting Firm.
Highlighted
- EFE Agency (2021). Peru's economy will grow by 13,2% in 2021, the second highest rate in Latin America. Available in https://www.efe.com/efe/america/economia/la-economia-de-peru-crecera-un-13-2-en-2021-segunda-mayor-tasa-america-latina/20000011-4701024
- Central Reserve Bank of Peru (2021). Weekly Informative Summary as of December 16, 2021. Available at https://www.bcrp.gob.pe/docs/Publicaciones/Nota-Semanal/2021/resumen-informativo-2021-12-16.pdf
- Central Reserve Bank of Peru (2021). Weekly Informative Summary as of December 16, 2021. Available at https://www.bcrp.gob.pe/docs/Publicaciones/Nota-Semanal/2021/resumen-informativo-2021-12-16.pdf
- Inter-American Development Bank (IDB) (2020). Covid-19 Newsletter No. 11. World trade in 2020 will end in recovery. Available in https://www.wto.org/spanish/news_s/pres21_s/pr889_s.htm
- Carlos Juárez (2022). World trade hits record $28.5 trillion in 2021. Available in https://thelogisticsworld.com/comercio-internacional/comercio-mundial-alcanza-record-de-28-5-billones-de-dolares-en-2021/
- Peruvian Foreign Trade Society – COMEXPERU (2022). Peruvian Exports Grow 3.3% In The First Two Months Of The Year. Available in https://www.comexperu.org.pe/articulo/exportaciones-peruanas-crecen-un-33-en-el-primer-bimestre-del-ano
- Peru Export and Tourism Promotion Commission – PROMPERU (2022). Peru becomes the world's leading exporter of grapes. Available in https://www.gob.pe/institucion/mincetur/noticias/585846-peru-se-convierte-en-primer-exportador-mundial-de-uvas
- Ministry of Foreign Trade and Tourism – MINCETUR (2022). Peruvian exports reach record in 2021 and exceed US$ 56 billion. Available in https://www.gob.pe/institucion/mincetur/noticias/581099-exportaciones-peruanas-alcanzan-record-en-2021-y-superan-los-us-56-mil-millones
- Maritime World (2021). Omicron variant threatens the nascent recovery of global trade. Available in https://www.mundomaritimo.cl/noticias/variante-omicron-amenaza-la-incipiente-recuperacion-del-comercio-mundial
PhD | Dr. (c) in Global Business Administration, MBA with a focus on strategic management and Master's in Public Management; University Professor and thesis advisor at the Universidad Privada del Norte (UPN); Partner and Commercial Manager of the Marketing Consulting Firm Peru; expert in trade fairs and missions, business roundtables, professional registered and authorized by the Regional College of Graduates in Administration of Lima, consultant on export issues, market research, business plans; Scrum Master with extensive experience as Key Account Manager and Project Manager.
The undersigned has served as Head of Market Research at the Centre for Business Studies (CEE).
