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IDB Report: Western Hemisphere trade continues to decline in 2002

Total Western Hemisphere exports to the world fell by over six percent in 2002, according to preliminary estimates released by the Inter-American Development Bank.

The weakness of international recovery in 2002, following the stagnation of global growth in 2001, has clearly affected Western Hemisphere commerce, the report said. Latin American exports to the world dropped by three percent this year, while total United States exports shrank by eight percent.

Trade within the Americas also slumped by six percent in 2002, according to the Periodic Note on Integration and Trade in the Americas, published by the IDB's Integration and Regional Programs Department. This continued the decline registered in 2001, which put an end to a decade-long trend in which trade within the Western Hemisphere grew at more than twice the rate of exports to markets outside the Americas. Trade among Latin American countries plunged by 12 percent.

Much of the decline in intra-Latin American trade is attributable to a contraction of imports in the countries of the South American Common Market, Mercosur(1), especially Argentina, where demand for foreign goods and services has fallen sharply as a result of the country’s severe economic difficulties. Import demand in Brazil has also remained subdued. Exports from all Latin American countries to the Mercosur subregion dropped by 35 percent, while trade among the Mercosur countries themselves fell by 37 percent. This followed a 46 percent decline in intra-Mercosur trade in 2001, after a decade in which such trade had expanded by an average of 16 percent a year.

The most striking decline was the 54 percent collapse in Brazil’s exports to its Mercosur partners in 2002, attributable in large part to recession in Argentina. Much less pronounced was the fall in Mercosur’s total exports, which declined by four percent. Mercosur’s sales to countries of the North American Free Trade Agreement(2) in fact grew by nearly a fifth, and the group’s exports to Central America increased by almost a third. As a result, intra-Mercosur exports accounted for only 11 percent of the group’s total sales for the second successive year, down from 21 percent in 2000.

By contrast, NAFTA’s exports to the world – down seven percent in 2002 – fell more sharply than its intragroup trade, which declined by five percent. Intra-NAFTA sales now make up 57 percent of the member countries’ total exports, a figure that has been growing consistently since 1995.

Overall, intra-Andean Community(3) trade grew by two percent in 2002. Some 12 percent of Andean exports now move among Community members, a share surpassed only once in the 1990s. Of the Andean countries, only Bolivia and Colombia posted growth in intragroup exports. But that growth was fairly strong, almost 14 percent in the case of Bolivia and nearly nine percent for Colombia, offsetting the decline in the other members’ sales to the group.

Central America was the only subregion to record growth in exports to the world (two percent), to the Western Hemisphere (one percent), to Latin America as a whole (two percent), and to Mercosur (11 percent). Trade among the member countries of the Central American Common Market(4) grew by just one percent, following a more than 12 percent expansion of intrasubregional commerce in 2001, while the share of intra-Central American exports in total exports remained steady at 23 percent.

Among Latin American countries, Uruguay, Argentina and Venezuela – in that order – experienced the sharpest decline in total exports. Uruguay’s total exports shrank by more than 11 percent. The devaluation of the Brazilian real in 1999 – Brazil is Uruguay’s main export market – marked the start of the Uruguayan recession. The subsequent crisis in Argentina, the second buyer of Uruguayan goods, sharply eroded exports yet further. Peru recorded by far the best export performance. Its total sales expanded by almost six percent, followed by Costa Rica with export growth of nearly three percent.


1 Argentina, Brazil, Paraguay and Uruguay.
2 Canada, Mexico and the United States.
3 Bolivia, Colombia, Ecuador, Peru and Venezuela.
4 Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua.

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