Inter-American Development Bank says exports will plunge 11% this year, same as Peru
Exports from Argentina are expected to drop 11 percent this year, the greatest decline of all the Mercosur trade bloc members, according to a study by the Inter-American Development Bank (IDB) released yesterday.
Exports to all destinations have decreased this year, except to the European Union, where exports were largely flat.
Argentina is tied with Peru for the largest export decrease in Latin America, according to the IDB.
The IDB’s expectations are in line with those unveiled by the INDEC statistics bureau, which said in the first ten months of the year both exports and imports have dropped 11 percent. In October, the last month in which the official statistics agency released figures, trade surplus plunged 39 percent compared to the same month last year with a 16 percent drop on exports and a 14 percent drop in imports.
Primary products displayed the weakest performance in Argentina, especially due to lower shipments of cereals and corn to Latin America and Asia (excluding China). A decline of sales in transport equipment to Brazil also weakened the trade performance, followed by fuel exports as the sector displayed a greater dependence on external markets. The exception was the soybean industry, which registered a slight expansion.
Meanwhile, exports from Latin America are expected to drop by about 1.4 percent in 2014, reaching a projected value of US$1.049 trillion, the first decline in exports since the collapse of international trade during the 2009 financial crisis. This marks the third straight year of disappointing performance in foreign trade, caused in part by low international commodities prices and weak international demand, according to the report.
“Ten countries reported increases in sales abroad, in some cases even higher than the world average. But those numbers did not make up for the drop in exports in the rest of the countries. While some countries benefited from the economic recovery in the United States, others were negatively affected by the fall in exports to the rest of the world,” the IDB said in its report.
After Argentina, the country that will experience the largest drop in exports will be Venezuela, which will decline six percent and El Salvador with a five percent drop.
More moderate declines will be seen in Colombia, which will drop three percent, Chile, with a one percent decline and Panama, which will see sales abroad drop one percent this year.
Exports from the Mercosur bloc as a whole experienced a seven percent decrease. Several Latin American countries, however, did see increases in exports. Mexico’s sales abroad rose five percent.
Other smaller countries will also register increases, with Nicaragua rising 10 percent, followed by Ecuador with eight percent, Bolivia with seven percent and Guatemala and the Dominican Republic both expected to grow seven percent. Honduras increased by five percent and Paraguay and Uruguay three percent.
Latin America’s export dynamics reflect the economic performance of its major trading partners.
The only destination to which exports increased was the United States, rising three percent. Purchases of the US from Latin America recovered at a slower pace than total US imports On the other hand, weak growth in the European Union, and a slowdown in Asia driven by China, provoked export reductions in these regions of four percent and five percent, respectively. In the case of the EU, although total imports began to recover in early 2014 after a year of contraction, purchases from Latin America did not take off.
Chinese demand for Latin American products grew at a higher rate than overall Chinese imports during 2014, but the sharp contraction of total Chinese imports that started in the second quarter affected the region as of July. Intra-regional trade in Latin America fell, given the deteriorating economic performance of several regional economies. A stronger demand from the United States should benefit the region next year, especially Mexico and Central America, according to the report. Meanwhile, the lower growth rates expected in China will continue to affect the principal exporters of agricultural products and minerals in South America, including Argentina.
Date: December 17, 2014