International trade in Latin America and the Caribbean could fall 23% in 2020 due to the impact of the coronavirus pandemic, which will also cause a decline in imports in the region, the Economic Commission for Latin America and the Caribbean (ECLAC) concluded in a report released Thursday.
In addition to the 23% contraction in the value of regional exports, the report, titled “Effects of COVID-19 on international trade and logistics,” projects that the value of imports will drop 25%.
The decrease occurs in a global context in which world trade has recorded a 17% drop in volume between January and May 2020.
“Latin America and the Caribbean is the developing region most affected by this situation, and it will be marked mainly by reduced shipments of manufactured goods, minerals and fuel,” the report stressed.
Covid and global trade
Trade in minerals and oil, with a drop of 25.8%, recorded the greatest setbacks between January and May of this year compared to the same period in 2019, followed by manufacturing (-18.5%).
The agriculture and livestock sector marked a slight increase of 0.9%.
“That reflects the fact that demand for food is less sensitive to contractions in economic activity, since it is an essential good,” the report said.
ECLAC noted that only four countries, all Central American, increased their exports between January and May 2020: Costa Rica (2%), Honduras (2%), Guatemala (3%) and Nicaragua (14%).
“This is due to a combination of greater sales of medical supplies and personal protective gear, and of agricultural products (the demand for which has been less affected by the pandemic),” the report says, also noting “the relative resilience exhibited by intra-Central American trade.”
Another aspect addressed by the report is the collapse of tourism (-50%) that will impact service exports, especially from the Caribbean.
Intraregional trade will also show a sharp contraction of 23.9%, especially in manufacturing.
ECLAC warns this “will lead to a loss of industrial capacity and a reprimarization of the region’s export basket.”
The report concluded by suggesting Latin America and the Caribbean countries can rebound better from the pandemic by reducing internal costs and promoting “efficient, smooth and secure logistics.”