The value of Latin American and Caribbean exports will contract by 2.4% at the end of 2019, after two years of robust growth, according to a report by the Inter-American Development Bank (IDB) released this Friday (12.12.2019). This is due to a reduction in demand from the markets to which the region exports, as well as to the variation in commodity prices and trade tensions.
In terms of “volume,” the reality is different. The region would end with an export growth of 0.3%, which the IDB considers “stagnation,” meaning that more or less a similar quantity of products has been sold, but at a lower value or price.
The region grew by 2018% in 8.7 and 2017% in 12.2. This year will be the third in a decade in which trade has declined, rather than expanded.
«The decline in the value of shipments from Latin America and the Caribbean followed the trend of global trade, which fell 2019% year-on-year in the first three quarters of 3.1."the IDB said in a statement.
There are two factors: the region is not selling more, in quantity, and the prices of almost all raw materials have fallen.
The mineral of iron It was the only one of the region's major export commodities whose price increased in 2019, due to a series of exceptional factors affecting supply, such as production disruption in Brazil and adverse weather events in Australia.
The price of oil reversed its trend by falling 12,9 percent in the first ten months of 2019 compared to the same period in 2018, responding to production cuts by major producers, demand limitations due to sanctions imposed by the United States on Iran and Venezuela, and attacks on oil facilities in Saudi Arabia, the report explains.
El copper saw its price fall 8,3 percent in the January-October period compared to the same period in 2018.
La soybean The price of coffee fell by 5,8 percent over the same period, below the level for the same period in 2018. The price fell as a result of China's imposition of tariffs on US imports in mid-2018, coupled with a drop in demand caused by the swine fever in the Asian country. Coffee also fell by 17,1 percent and sugar remained relatively stable during 2019.
As for markets, the IDB points out that the European Union has reduced its purchases by 7%, China has stopped buying by 2.3% and purchases in the same region, that is, between Latin American countries, fell by 10.8%.
«While advanced economies are beginning to show a cautious return to optimism, emerging economies continue to present risk factors for Latin American and Caribbean exports., said Paolo Giordano, senior economist in the IDB's integration and trade sector and coordinator of the study.
How was Argentina's performance?
The report states that "Argentina's foreign sales grew by 5,0% in 2019, following the trend of the previous year." He points out that 13% of the increase in export volumes is explained by the increase in agricultural production affected by climatic factors in 2018, which offset the fall in prices. The IDB notes that The largest shipments from this sector were to China (64,9%) and the rest of Asia (25,4%) and offset the negative performance of exports to all remaining destinations.
En South America, these same factors explain the expansion of the volumes exported by Uruguay, where the estimated rate for 2019 is 8%.
Colombia recorded a 2% increase in volumes, mainly explained by the increase in oil exports.
Meanwhile in Brazil fell by 3% due to the impact of several factors, including lower soybean shipments due to adverse weather conditions, the drop in iron ore production due to the accident at the Brumadinho mine and the contraction in automobile sales, especially to Argentina, due to the economic recession affecting the country.
The IDB observed in Chile a 4% decrease in real exports. In Paraguay The contraction of exported volumes was 7% and in Venezuela, exports fell by 31%.
The figures are estimates based on the data available as of November 25 and the trends that each country has had throughout the year.
The IDB added that the drop in the value of exports is due to medium-term trends, and that it predicts that there will be no significant changes in the first months of next year.
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