The value of goods exported from Latin America and the Caribbean will grow by 27% in 2011, which is similar to that of last year according to a report presented in Santiago, Chile, by the Economic Commission for Latin America and the Caribbean (ECLAC).
The report, Latin America and the Caribbean in the World economy 2010-2011 also estimates the value of imports for the year which are forecasted to grow 23% which means the region should achieve a trade surplus of over 80 billion dollars.
The 27% export growth is the result of a 9% increase in the volume of exports and an 18% jump in prices for products exported by the region.
The report underlines the significance of south-south trade, particularly China and Asia which are currently the main global trade driving force: developing countries exports expanded 17% last year and from industrialized countries, 13%.
ECLAC says that international trade has significantly contributed to global recovery following the economic and financial crisis of 2008 and 2009. However, it also warns that currently the complex situation in developed countries, in particular the United States and in Europe, is starting to affect emerging nations and could impact with a decrease in the growth rate of exports to those markets in 2012. However the specific impact of the slowdown will depend on the type of products exported and the markets to which they are directed.
Likewise lower growth in emerging economies, which would further weaken industrialized countries, should lower international prices of basic products, with impact on the trade and current account balances of commodities export countries. Therefore “there is a need to give priority to macroeconomic prudence and forms of regional trade and financial cooperation which can buffer the impacts in the event of the weakening of the international scenario.
The levels of global volatility and uncertainty are worrying. There are still significant global imbalances, such as the sovereign debt crisis in various European countries and he fiscal uncertainty in the US, which would in turn weaken international trade stated Alicia Bárcena, ECLAC Executive Secretary on the presentation of the report.
Over the last decade, the importance of Asia for Latin America and Caribbean trade increased significantly compared with the US contraction and EU stagnation.
Over the last five years, exports from the region to Asia-Pacific grew at an annual rate which tripled that of total exports (22% versus 7%). During the same period, imports from Asia-Pacific have also grown more quickly than total imports (annual rates of 15% versus 9%, respectively). Likewise, Latin America has become China's most dynamic trading partner, with an annual growth of 31% in its exports to the region between 2005 and 2010, compared with 16% to the rest of the world. Exports to Asia are still concentrated in primary products and their basic processing, while those directed to Latin America and the Caribbean, and the US are mainly manufactured based products.
With regard to trade balance, South America maintains a balanced trade with China and the rest of Asia, a slight surplus with Europe and a small deficit with the US, while Mexico and Central America have a significant surplus with the US, a deficit with the EU and bulging deficit with China and the rest of Asia-Pacific.
In the report, ECLAC also states that the US lacks an explicit trade policy towards Latin America and the Caribbean, despite the fact that it is still the region's main partner. For example, since 2007, there have not been greater developments in trade negotiations. This situation contrasts with the dynamism shown by lasting negotiations in recent years between various countries and their European and Asian partners.
ECLAC suggests a new alliance between the US of America and the region in order to tackle common challenges and an improved integration to the world economy. The report adds there are interesting prospects for cooperation between Europe and the region in areas such as green technology and social business responsibility.
Nevertheless Latin America and the Caribbean are facing an unfavourable situation with important assets: sustained growth from 2003 to 2008; strong recovery in 2010 and a significant rate of growth in 2011; a balanced fiscal structure, low levels of inflation and debt, and dramatic falls in the levels of unemployment and poverty. In a medium-term perspective, large reserves of natural resources, demographic advantages, growth of the middle classes and market potential place it in an attractive position for improving negotiation capacity with its main partners.
However, it must first overcome various challenges to achieve better international integration.
For example, the revaluation of regional and global alliance strategies to take advantage of South-South trade and investment opportunities, and the creation of a joint approach with Asia-Pacific, in particular China.
Greater productive diversity and inclusive growth must also be achieved. Therefore, some of the measures needed include increasing value and knowledge components incorporated to exports, diversifying products and markets, insertion into global value chains, improving the governance of natural resources and taking innovation to another level.
ECLAC finally calls on countries of the region to increase their negotiation power by taking advantage of regional assets and adopting a common stance on the global agenda on issues such as the Doha Round, climate change and the financial crisis. The UN agency also calls for the development of an open regionalism to improve infrastructure, energy, logistics, transport and initiatives for facilitating and financing intra-regional trade.