São Paulo – The Economic Commission for Latin America and the Caribbean (ECLAC) presented this Wednesday (23) in Santiago, Chile, new estimates for the performance of foreign trade in the region. The report Latin America and the Caribbean in the World Economy 2016 forecasts that regional exports will drop 5% this year. It will be the fourth consecutive annual decline.
According to a statement from the agency, the fall is the result of a lower global demand for the region’s products and the growing uncertainty in the global economic scenario. The decline, however, won’t be as sharp as the one in 2015, which reached 15%.
For imports, ECLAC estimates a decline of 9.4% in 2016, similar to last year, which registered a fall of 10%.
Intraregional trade, in turn, should also drop 10% this year, an even sharper decline than the one expected for trade between the region and the rest of the world. According to the UN agency, it’s also the fourth consecutive fall, and it’s more pronounced among South American countries.
Latin America and the Caribbean’s participation in global exports of goods and services remains stagnant at 6% for 15 years already and, according to ECLAC, in the case of high-tech goods and business, financial and telecommunications services, the region has fallen behind development nations in Asia, especially China.
Facing this scenario, the agency advises for a proactive response by the Latin America and Caribbean countries. “We must diversify the productive structure of Latin America and the Caribbean to drive economic recovery. We must continue betting on diversification, on value chains, on production chains as the foundation and on intraregional integration, which are more necessary than ever,” said Alicia Bárcena, Executive Secretary of ECLAC, in a statement.
As such, the agency advises the region’s countries to push for more diversification and integration, improve trade facilitation, promote the convergence of trade blocs, development of a regional digital market, the implementation of an infrastructure program, the adoption of new industrial and trade policies and “an environmental big push.”
Brazil
In Rio de Janeiro, the president of the Brazilian Foreign Trade Association (AEB), José Augusto de Castro, made a similar analysis on the country’s foreign trade. Although the trade balance’s surplus already surpassed USD 40 billion this year and is going towards the record-breaking number of USD 46 billion, he declared that this is not a fact to be celebrated, since the surplus is the result of sharp declines in imports caused by the economy’s downturn.
“This number doesn’t generate jobs, it generates unemployment since both imports and exports have fallen. That is, the economic activity declined, thus, employment declined. If this record is achieved, it’s one not to be celebrated,” said the executive at the opening of the National Meeting of Foreign Trade (Enaex) according to news outlet Agência Brasil.
Castro declared that foreign sales of manufactured products have been declining for five years already and he argued for a reduction of costs for the companies so exports don’t rely on a favorable exchange rate. “With the foreign exchange rate at BRL 4, the Brazilian product would be competitive. But we were out of the global market and to get in we need to displace someone. We weren’t able to displace the Chinese, especially,” he said, according to Agência Brasil.
According to AEB’s president, Brazilian exports should fall 2% to 3% this year, with shipments of manufactured products going down 1% to 1.5%.
For the period between 2017 and 2010, ECLAC expects an annual average growth of 2.9% in exports by Latin America and the Caribbean, and 3.1% in imports.
*Translated by Sérgio Kakitani
