Latin American exports lose momentum in 2022 and 2023, report by IDB Bank

The value of Latin American exports during 2022 rose at an estimated 18.8% rate, which represents a downward trend in the region’s commerce figures of some 27,8% when comparing 2021 with 2022, according to a report from the Inter American Development Bank, IDB.

In effect the IDB points out that the 2022 export performance was mainly explained by higher prices, while volumes lost momentum.

The latest edition of Trade Trends Estimates: Latin America and the Caribbean indicates that in the coming months, the export growth rate is expected to slow further in response to the downward trend in commodity prices, the war in Ukraine, restrictive monetary policies to reduce inflation in leading economies and the slowdown in global growth.

”After the recovery in 2021, a series of global shocks have sent exports from Latin America and the Caribbean into a slowdown that will continue into 2023. Reversing this trend will be key to shoring up economic growth in the region,” said Paolo Giordano, Principal Economist at the IDB’s Integration and Trade Sector, who coordinated the publication.

Shipments drove the region’s external sales to the United States, which are estimated to have grown by 21.3% in 2022. Demand from the rest of Latin America and the Caribbean’s major trading partners slowed dramatically compared to 2021. Sales grew by 2% to China, 14% to the European Union, and 25.6% to Latin America and the Caribbean.

In 2022, the prices of most commodities exported by Latin America and the Caribbean climbed. Between January and November 2022, the year-on-year prices of oil (43%), coffee (29.1%), soybeans (13%) and sugar (5.5%) all increased. In contrast, the prices of iron ore and copper fell by 28.9% and 4.9% year-on-year, respectively.

According to the report, the shock caused by the Russian invasion of Ukraine “further increased the prices of LAC’s main export commodities.” However, “in most countries, the uptrend changed direction in the middle of the year in response to slowing global demand, forecasts of low growth, and the appreciation of the US dollar.”

Exports are estimated to have grown by 18.2% in South America in 2022 after increasing by 36% in 2021. The upturn in commodity prices explained much of this performance, which benefited from the dynamism of intraregional trade and was particularly hard hit by the cooling of demand from China.

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

Source: MercoPress

To read the original reporting, please access: https://en.mercopress.com/2023/01/18/latin-american-exports-lose-momentum-in-2022-and-2023-report-by-idb-bank

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