Exports from Latin America and the Caribbean grow amid risks of a downturn

The value of exports from Latin America and the Caribbean grew in the first quarter of 2022 at 22.6 percent year-on-year compared with the 27.6 percent increase accumulated by the end of 2021, according to a new report from the Inter-American Development Bank (IDB).

This increase is due to improvements in export prices and, to a lesser extent, a 10.1 percent year-on-year increase in volumes, according to the latest edition of Trade Trends Estimates: Latin America and the Caribbean, which analyzes the trade performance of 22 countries in the region.

“Export growth for the region is expected to decelerate further in the coming months due to the slowdown in China’s economic growth, the lingering disruption of global supply chains, and the risks associated with the correction of monetary policies,” said Paolo Giordano, Principal Economist at the IDB’s Integration and Trade Sector, who coordinated the study.

The armed conflict in Ukraine will have disparate effects on Latin America and the Caribbean’s trade performance. On the one hand, it will continue to push up the prices of several of the commodities that the region exports but could also lead to lower growth and higher global inflation. Regardless, the impact of the conflict on the region’s economies will be very heterogeneous.

Shipments to some of Latin America and the Caribbean’s main trading partners continued to grow at relatively high year-on-year rates: 21.5 percent to the United States, 26.9 percent to the European Union, and 28.9 percent to Latin America. However, the year-on-year increase in exports to China was three times lower (10.1 percent) than in 2021.

Export prices

In the first four months of 2022, the prices of the region’s main export commodities increased compared to the same period in 2021. The upward trend in the prices of extractive products was most pronounced in the case of oil (62.2 percent year-on-year) and copper (15.9 percent), while iron ore prices dropped by 18.7 percent. Agricultural commodity prices also increased: coffee went up by 70.4 percent, sugar by 16.3 percent, and soybeans by 12.7 percent.

Exports from South America are estimated to have grown by 27.3 percent year-on-year in the first quarter of 2022, after having increased by 35.6 percent in 2021. A slowdown was observed in nearly every economy in the subregion except Colombia, Ecuador, and Venezuela, which benefited from the sharp increase in oil prices.

Exports from Mesoamerica,which includes Mexico and the Central American countries, increased by an estimated 18.2 percent year-on-year, after growing by 19.4 percent in 2021.

The United States accounted for almost all of the total increase in exports from Mexico, which grew by 18.1 percent in January–March 2022 compared to the same period in 2021.

Shipments from Central America grew by 18.7 percent. Latin America and the Caribbean itself was the most dynamic destination for external sales from Central America, explaining half of the total growth, followed by the United States.

Total imports from Latin America and the Caribbean increased by 27.1 percent year-on-year in the first quarter of 2022, after growing by 37.4 percent in 2021.

The report was produced by the IDB’s Integration and Trade Sector and its Institute for the Integration of Latin America and the Caribbean (INTAL).