WASHINGTON, The Inter-American Development Bank (IDB) says the value of goods exports from Latin America and the Caribbean (LAC) increased by an estimated 18.8 percent last year.
It said the downward trend in the region’s external sales consolidated during this period after growing 27.8 percent in 2021, according to an IDB report prepared by the IDB’s Integration and Trade Sector and its Institute for the Integration of Latin America and the Caribbean (INTAL).
Exports from the Caribbean rose by an estimated 38 percent in 2022 after growing by 44.4 percent in 2021. The United States accounted for most of the increase, followed by the European Union.
Latin America and the Caribbean’s total imports increased at an estimated rate of 26.3 percent in 2022 after growing by 37.4 percent in 2021.
The Washington-based financial institution said higher prices mainly explained the region’s export performance while volumes lost momentum.
“In the coming months, the export growth rate is expected to slow in response to the downward trend in commodity prices, the war in Ukraine, restrictive monetary policies to reduce inflation, and the slowdown in global growth, the latest edition of Trade Trends Estimate: Latin America and the Caribbean has found.
“After a rapid recovery in 2021, global shocks have sent exports from Latin America and the Caribbean into a slowdown that will continue into 2023. Reversing this trend will be key to shoring up economic growth in the region,” said Paolo Giordano, Principal Economist at the IDB’s Integration and Trade Sector, who coordinated the publication.
The region’s external sales were driven by shipments to the United States, estimated to have grown by 21.3 percent in 2022. Demand from the rest of Latin America and the Caribbean’s major trading partners slowed dramatically compared to 2021. Sales increased by two percent to China, 14 percent to the European Union, and 25.6 percent to Latin America and the Caribbean.
The report noted that in 2022, the prices of most commodities exported by Latin America and the Caribbean climbed.
Between January and November 2022, the year-on-year prices of oil (43 percent), coffee (29.1 percent), soybeans (13 percent), and sugar (5.5 percent) all increased. In contrast, the prices of iron ore and copper fell by 28.9 percent and 4.9 percent year-on-year, respectively, the report noted.
According to the report, the shock caused by the Russian invasion of Ukraine “further increased the prices of LAC’s main export commodities.”
However, “in most countries, the uptrend changed direction in the middle of the year in response to slowing global demand, forecasts of low growth, and the appreciation of the US dollar.”
Exports are estimated to have grown by 18.2 percent in South America in 2022 after increasing by 36 percent in 2021. The upturn in commodity prices explained much of this performance, which benefited from the dynamism of intraregional trade and was particularly hard hit by the cooling of demand from China.
Exports from Mesoamerica increased by an estimated 18.8 percent year-on-year in 2022 after growing by 19.4 percent in 2021.
The report noted that, unlike the rest of the region, Mexico experienced a continuous increase in its export growth rate throughout the year due to the rise in volumes shipped to the United States. Although exports from Central America slowed significantly in 2022 compared with 2021 (26.6 percent), they grew by 13.6 percent, boosted by demand from within the region and the United States.
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