A new study by the Inter-American Development Bank (IDB) has found that the value of exported goods from Latin America and the Caribbean (LAC) grew at an estimated rate of 2.9 per cent year-on-year in the first quarter of 2023, after increasing by 16.4 per cent last year.
According to the latest edition of the IDB’s Trade Trends Estimates report, although the region’s trade performance was better than the world average, exports slowed significantly due to lower commodity prices and weaker export volumes.
The report said looking ahead, the balance of risks is moderately weighted to the downside due to the impact of tight monetary policies on global growth, uncertainty surrounding the war in Ukraine, the depletion of the expansionary effect of the reopening of the Chinese economy, and the reversal of the upward trend in commodity prices.
“The post-Covid expansionary phase in the trade cycle has run its course, and Latin American and Caribbean exports have moved into a slowdown that is set to continue into the next quarter before stabilizing in the second half of the year,” said Paolo Giordano, principal economist at the IDB’s Integration and Trade Sector, who coordinated the publication. “Policies and investments that seek to boost competitive insertion into foreign markets will be key to shoring up the region’s economic recovery,” Giordano added.
The report contains detailed data on the export performance of 20 countries in Latin America and the Caribbean.
According to the report, the variation in export values with regards to the Caribbean countries showed that Barbados had experienced a growth rate of 6.3 per cent in the first quarter of this year, as against 3.4 per cent last year, Belize registered a minus 20.6 per cent in the first of the year, as compared with 10.8 per cent last year.
Guyana’s export value increased to 89.5 per cent this year as against 24.3 per cent for the comparable period last year, while there were no figures for Jamaica, Suriname and Trinidad and Tobago this year, even as they had registered 28.4, 13.2 and 46.2 per cent, respectively, last year.
The IDB report said that the slowdown affected the entire region but was especially pronounced in the economies of South America, where the impact of falling prices was also greater due to the weight of commodities in their export baskets.
According to the report, the prices of Latin America and the Caribbean’s main export commodities were extremely volatile between January and April 2023.
It said year-on-year growth rates were negative for the prices of oil (-18.2 per cent), coffee (-12.6 per cent), iron ore (-11.9 per cent), copper (-11.1 per cent), and soybeans (-5.2 per cent). Sugar prices increased by 15.1 per cent year-on-year.
The report expects that “the main adjustment to prices took place in the first quarter of 2023” and that “prices will remain largely stable for the rest of the year, at historically high levels”.
However, “the forecast includes risks of different natures that may unfold against a backdrop of uncertainty regarding the evolution of interest rates and the value of the dollar, which tend to have a direct impact on commodity prices.”
The region’s total imports are estimated to have grown by 0.6 per cent in the first quarter of 2023 after expanding by 21.1 per cent in 2022.
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