In the first quarter of this year, the growth of exports from Latin America and the Caribbean showed an alarming slowdown, increasing by a mere 2.9% compared to the same period in 2022.
This is a stark contrast to the 16.4% year-on-year growth during the same quarter the previous year.
The figures become even more worrisome when examining individual sub-regions and countries.
South American exports, for instance, decreased by 0.3% year-on-year in the first quarter, a significant downturn from the 16.2% growth seen the previous year.
Several nations reported steep declines in exports: Argentina’s exports plunged by 17.9% between January and March, Bolivia’s fell by 23.5%, and Venezuela’s exports dropped by 20.2%.
However, the two leading economies of Latin America, Brazil, and Mexico, did see growth in their export values, albeit at a slower pace than a year ago.
Between January and March 2023, Brazil’s exports rose by 4.8%, compared to a 19% increase during the same period in 2022.
Mexico’s exports grew by 6.8%, down from a 16.9% increase in 2022.
Countries experiencing export growth in the first quarter of this year compared to the same period last year include:
Barbados: 6.5%
Brazil: 4.8%
Chile: 10.7%
Costa Rica: 14.1%
Guyana: 89.5%
Mexico: 6.8%
Nicaragua: 5.8%
Paraguay: 23.4%
Conversely, countries experiencing a drop in exports in the first quarter of this year compared to the same period last year include:
Argentina: -17.9%
Belize: -20.6%
Bolivia: -23.5%
Colombia: -4.7%
Ecuador: -7.7%
Honduras: -3.7%
Peru: -4.8%
Dominican Republic: -1.5%
Uruguay: -3.5%
Venezuela: -20.2%
According to an Inter-American Development Bank (IDB) report, there was significant volatility in the prices of key commodities exported by Latin America and the Caribbean between January and April 2023.
Year-on-year price variations were negative for oil (-18.2%), coffee (-12.6%), iron (-11.9%), copper (-11.1%), and soybeans (-5.2%).
Sugar was the only commodity to record a year-on-year price increase of 15.1%.
The report suggests that the most substantial price adjustment occurred in the first quarter, predicting that prices will remain stable for the rest of the year, albeit at historically high levels.
However, the forecast is subject to several risk factors, given the uncertainty surrounding interest rate trends and the dollar exchange rate, which typically directly impact commodity prices.
Despite the economic slowdown and a contraction in world trade, the IDB concludes that Latin American and Caribbean goods exports grew by 2.9% year-on-year in Q1 2023, following a 16.4% expansion in 2022.
Interestingly, the region’s export performance outpaced the global average, considering that world trade had entered a contraction phase by February.
In terms of medium-term expectations, the IDB report warns of continuing high inflation rates globally, which necessitate ongoing restrictive measures and pose risks to the real economy and the financial sector.
It cautions that further slowdown in growth, particularly in the United States, could adversely affect the backbone of the region’s current exports.
The growth trajectory of China, a crucial driver of trade expansion in the South American sub-region, also carries significant weight.
The IDB also emphasizes that the economic fallout from China’s shift away from its COVID-zero policy has had a slight but transient impact on demand in the early months of 2023.
Uncertainties loom over the impact on real demand and the potential influence on the prices of various raw materials for which China is the leading global consumer.
With information from Bloomberg
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