Lower commodity prices dampening export growth

The value of Latin American and Caribbean exports rose 10.6 percent in the first quarter of 2018 against the same period last year, bolstered by higher demand from its main trading partners, particularly from other countries within the region and the European Union, according to a report by the Inter-American Development Bank (IDB).

However, this growth was slower than the 11.9 percent registered at the end of 2017, due mainly to lower or flattening commodities prices for such products as coffee, soybeans, sugar and iron ore. This data is included in the six-month update of the publication Trade Trends in Latin America and the Caribbean.

Export volumes continued to grow at annual rates of approximately 4 percent, bolstered by shipments from Brazil, Mexico, Colombia and Argentina. The rest of South America – and, to a lesser degree, Central America – contributed to the decline in growth in export values in the first quarter.

“After a long period of declining trade, the rise in export volumes is good news,” said Paolo Giordano, the Principal Economist for the Integration and Trade Sector of the IDB and the report’s coordinator. “However, the region must integrate and diversify more to be better prepared against volatility in commodity prices.”

In 2017, the recovery in the total value of Latin American and Caribbean exports was bolstered by greater demand from the region’s main trading partners. The first quarter of 2018 was marked by a sharp slowdown in shipments to China, as sales to the European Union and countries within the region accelerated.

South America, which had registered a 14.9 percent average rise in 2017, increased its sales by 10.4 percent on an annual basis in the first quarter of 2018. The lower growth rate comes when export volumes stand a full 25 percent below their 2011 peak.

In Mesoamerica, exports grew 10.8 percent on a year-on-year basis in the first quarter of 2018, due to the 11.5 percent increase in shipments from Mexico and 4.8 percent from Central American countries. This reflects an improvement in external sales by Mexico in comparison to 2017 (9.5 percent) and a deceleration in Central America (5.8 percent).

The Caribbean saw a 5.3 percent rise in its exports in 2017.

The value of imports to the region jumped 14.3 percent on a year-on-year basis in the first quarter of 2018, after rising 9.6 percent on average in 2017. This growth has picked up throughout 2017 and early 2018, outstripping the rise in exports.