Latin American, Caribbean exports to jump 21 per cent this year, finds UN study

A new United Nations study says that exports from Latin America and the Caribbean will grow by 21.4 per cent this year, owing mainly to purchases from Asia – particularly China – and the normalization of United States demand.

According to the study, “Latin America and the Caribbean in the World Economy 2009-2010: A crisis generated in the centre and a recovery driven by the emerging economies,” the expected rise in 2010 follows a 22.6 per cent decline in 2009, making the increase even more pronounced. The increase is driven mainly by South American sales of prime materials.

Produced by the UN Economic Commission for Latin America and the Caribbean (ECLAC), the report indicates, for example, that regional exports to China rose from -2.2 per cent in the first semester of 2009 to 44.8 per cent during the same period this year. However, there are significant differences within the region.

Growth has been much greater in countries that export natural resources, such as agricultural, livestock and mining products – namely, South American nations, the study shows. It has been slower in countries that import basic commodities and depend on tourism and remittances, such as the Central American and the Caribbean economies.

The differences between subregions are also significant.

According to ECLAC estimates, exports from Mercosur countries (South America’s “Southern Common Market”) are expected to increase 23.4 per cent this year and those from Andean nations by 29.5 per cent.

By contrast, sales from the Central American Common Market will expand only 10.8 per cent. Exports from Mexico, for example, are expected to rise by 16 per cent, and from Panama 10.1 per cent, while sales from Chile should see growth of 32.6 per cent.

The most notable upswing from the worst period of the crisis in 2009 is expected in the Caribbean Community (CARICOM), whose exports are estimated to leap from -43.6 per cent in 2009 to 23.7 per cent in 2010.

The report also examines trade developments in the region over the past decade, concluding that export growth during those ten years was slower than in the 1990s and lower than in other developing regions, both in value and volume. However, the region took two different routes during that time: South America doubled export growth, while in Mexico and Central America it dropped by over 50 per cent.

This disparity is largely due to the fact that the exports that most increased were natural resources from South America, at the expense of manufactured products and services with varying degrees of technological content. According to the report, the subregion has reverted to an export structure based on prime materials similar to that of 20 years ago.

While in 1999 natural resources made up 26.7 per cent of total exports from the region, in 2009 they composed 38.8 per cent of the total.

The difference in the growth rates of natural resource exports and manufactured goods realigned the relative weight of Mexico’s exports, on the one hand, and sales from South America, on the other.

The participation of Mexico in the region’s total exports fell from 40 per cent in 2000 to 30 per cent in 2009, while Brazil increased its participation from 13 per cent to nearly 20 per cent during the same period. Argentina, Chile, Colombia and Peru also expanded their participation in total exports based on the sale of natural resources.

The region has been unable to improve the quality of its international insertion, and the expansion of natural resource-related sectors does not seem to have contributed sufficiently to the creation of new technological capacities, states the report.

“The diversification of exports, a strong boost to competitiveness and innovation, and greater regional cooperation will allow Latin America and the Caribbean to improve the quality of its insertion in the global economy, close productivity gaps, and capitalize the opportunities of international trade in order to grow with more equality,” said ECLAC Executive Secretary Alicia Bárcena during the launching of the report at the Commission’s headquarters in Santiago, Chile.