Alongside the world economy, the main trend for the Latin America and Caribbean region during 2015 is a slowdown in exports.

It is estimated that the contraction will be 14% in sales of goods from Latin America and the Caribbean during 2015. This is the biggest drop since the beginning of the international financial crisis in 2010, reducing the value exported to 915 billion dollars . This makes it the third consecutive year in which sales have fallen. This is also a trend in world trade, which registered a reduction of 11.9% between January and September 2015. A 10.3% drop in imports from this region is also expected, determined by prices and lower economic growth regional.

The successive corrections in product prices, pressure from the appreciation of the US dollar and the unit of account for world trade influenced export values. This dynamic in prices was not compensated by relevant growth in exported volumes, but rather a drop in real demand was observed in some markets.

Overview

Impact by sub-regions – after two years of virtual stagnation, in the last months of 2014 there began to be a deterioration in exports, which deepened in 2015, especially in the last few months. South American countries were the first to be affected by the drop in the prices of basic products, particularly oil and metals, as well as the slowdown in demand from Asian economies – these are the main factors behind the contraction in exports in 2015 (- 21%).
In Mesoamerica, the retraction was smaller than in the rest of the region (-4%), and more marked for Central American exports (-7%) compared to shipments from Mexico (-4%), which had a greater relative weight in that sub-region. -region. Exports from Caribbean countries fell by 23% (if Trinidad and Tobago were excluded it would be 9%)
The aggregate result of exports from Latin America and the Caribbean is the product of declines in almost all countries: only El Salvador (+6%) and Guatemala (+2%) showed growth in sales abroad. The countries with the largest estimated contractions are where hydrocarbons have the greatest weight.

Markets – This situation occurs in a context of scarce and irregular growth of the main trading partners, notably China and the region itself, with a continuous contraction in external demand channeled in Latin America and the Caribbean. The contraction in Chinese imports has moderated in recent months, however the growth in the volume of imports of basic products has not compensated for the drop in prices, with it being estimated that the year will end with a drop of 14%.

US imports follow the pattern of decline in basic products, determined by lower prices and the strong influence of oil imports, as well as an insufficient recovery in manufacturing – an estimated reduction of 7%. In the case of the European Union, there is a greater drop in purchases, partly due to the depreciation of the euro against the dollar, which will lead to a drop in exports of 18% in 2015 and 19% in inter-regional imports.

In general, the contraction in imports was greater on the part of its main trading partners compared to total imports, which demonstrates the more severe situation in the external sector of Latin America and the Caribbean.

Prices – the main factor behind the deterioration in exports is the downward trend in the prices of the main basic products in Latin America and the Caribbean since 2011, which has worsened since the end of 2014. Prices of final consumer goods remain at previous levels to the international crisis at the end of 2008. The prices of energy products, mainly oil, iron and copper, suffered heavy falls.

Performance by subregion

Mesoamerica – at the end of the year, exports from this sub-region totaled 427 billion dollars, ie, a contraction of 4%. This essentially reflects exports from Mexico (-4%) due to its total weight, although the worst performance is from Central America (-7%). The remaining Mesoamerican countries had somewhat heterogeneous results (Costa Rica with -17%, Panama with -15%, Dominican Republic with -14%, Nicaragua with -5%, Honduras with -1%, offset by El Salvador with 6% and Guatemala, with 2%). Intraregional trade grew by 2%, mainly due to manufactured goods. Imports to the USA and EU decreased by 3% and 7% respectively.

As for Mexico, where 80% of its products are destined for the USA, sales fell by 4% in 2015, reflected in minus 3% for the USA, -20% for China, -7% for the EU and -10% for the USA. % for Latin America. This is due to the reduction in sales of manufactured products and the fall in the price of oil.

Regarding Costa Rica, the USA and Asia constituted its main customers. It was affected by reduced sales under the Special Trade Regime (REC) and lower sales of electronics. On the other hand, sales to the rest of Mesoamerica rose 9%, but this is insufficient to offset relations with other partners. It grew 11% in Central America, but shrank 8% in relation to Mexico.

El Salvador has a positive export level (6%). Final exports contributed 2/3 to the growth in shipments. With the exception of the EU, sales increased in all destinations, such as the USA, Mesoamerica and China (major sugar importer).

In Guatemala, the 2% growth reflects the performance of its most relevant trading partners: a large increase in some (such as China and Japan) and a decrease in others (Korea, El Salvador, USA, Canada).

In Honduras there is a slight variation in exports, although negative 1%. It recorded large contractions in clients such as China (-80%) and Mexico (-47%), partially offset by the EU (8%) and South America (47%), with an increase in exports of its main products.

Nicaragua contracted its shipments and final exports by 5%, due to the decrease in sales to Canada, Mexico and Venezuela. However, exports to the USA and Central America increased.

Final exports to Panama reflect a 15% retraction, with significant reductions from China, USA and EU, but with increases from Mesoamerica and Asia.

In the Dominican Republic, the countries that most contributed to the 14% drop in its exports were the USA, Haiti and Canada. However, its sales to Asia (except China) quadrupled, particularly India, and it also grew in Mesoamerica, which mitigated the decline in its economy.

South America: in 2015, exports from countries in this region will stand at 471 billion, with a significant drop of 21% compared to 2014. The most affected were Venezuela, Colombia, Bolivia and Ecuador, without forgetting the contractions in the remaining countries. Dependence on Asia (except China) and the US worsens future trends.

Argentine exports (-16%) were mainly affected by the reduction in Brazilian, US and EU exports, with a small compensation from the increase in Chinese sales.

In Bolivia, the 32% decrease in exports is mainly explained by the reduction in regional sales, particularly to Argentina, Brazil and the USA, due to the reduction in gas and oil prices.

Brazil’s external placement was reduced in its main destinations. Iron, oil and soy explain the reduction in exports mainly due to the effect on their price.

In Chile, its 16% drop in exports is due to the drop in shipments to China, the rest of Asia, the EU and the intra-regional market, mainly due to the reduction in the price of copper.

Colombia, with a 35% drop in exports, also suffered the consequences of the reduction in oil prices. Sales to China and Asia even fell more than expected with this situation.

Part of the decline in Ecuador’s exports (-28%) is due to lower shipments to the USA, mainly due to the effect of falling prices, and part is due to countries in the region itself. Despite this, it expanded sales to Asia, especially China, although in insufficient numbers to compensate for the large drop.

In Paraguay, the contraction (-15%) is largely explained by the drop in soybean sales and lower prices. The same goes for soy flour and meat.
Peru’s exports (-16%) to the rest of Latin America, the Caribbean and the USA recorded the biggest reduction for the country, in part due to the fall in mineral prices.

In the case of Uruguay (-16%), it expanded its sales to the USA, although it presented a strong contraction in shipments to its remaining customers, especially to Mercosur partners, also due to the drop in product prices.

In Venezuela, the drop was 49%, reducing exports to all destinations, mostly due to the reduction in the price of oil.

Caribbean: in general, an aggregate contraction of 23% is estimated for 2015, rising to 9% if Trinidad and Tobago are excluded. The US and EU, its main markets, had negative performances this year.

The reduction in exports in Barbados (-5%) is explained by lower intra-regional shipments, even offset by increases to the USA and EU.

In Belize, the EU and Mexico were the main causes of the decrease in its exports (-13%)
In Guyana, its reduction (-4%) was due to the contraction in shipments to the USA and Canada, mitigated by growth in sales to Panama, partners in the Caribbean and the EU.
Practically all of Jamaica’s partners reduced their trade with the country in 2015 (-7%), highlighting the weight of the USA, EU and countries in its sub-region.

The estimated reduction in sales in Suriname (-14%) was essentially caused by the behavior of the USA.

The collapse in hydrocarbon prices severely affected Trinidad and Tobago’s exports (-27%), with the USA and the Caribbean region contributing most to this situation.

Conclusion

In 2015, exports from Latin America and the Caribbean recorded the biggest drop since the start of the international financial crisis, recording a 14% decrease compared to the same year last year. This number largely reflects the reduction in prices of basic products, which are widely exported on this continent, and the weak performance in the sale of manufactured products. There was an almost immediate impact of the decline in extra-regional shipments on intra-regional trade levels, highlighting the dependence of Latin American and Caribbean countries on the external sector. Only in the Mesoamerican region do economies act as a focus for absorbing their exports.

In 2016, the risks to export growth remain high. On the one hand, there is no great sign of a reversal of this phase of contraction in raw materials prices. On the other hand, the modest growth of the USA and the EU has to be combined with a slowdown in the Chinese economy and intra-regional trade itself, which has to be driven towards exports. Finally, the divergence of US and euro zone monetary policies points to an appreciation of the dollar that could accentuate deflationary pressures on trade in this region.

Given this situation, it is urgent to implement trade promotion and facilitation policies that contribute to reversing the current trend and boosting trade diversification.