By Sue-Ann Wayow
SINCE the global financial crisis of 2008-2009, trade in Latin America and the Caribbean has been at its worst in 2020 due to the Covid-19 pandemic.
Regional exports have dropped by 13% in 2020 and imports decreased by 20%.
In its International Trade Outlook report 2020, the Economic Commission for Latin America and the Caribbean (ECLAC) stated that restrictions imposed by various governments contributed significantly to the deep decline.
ECLAC added, “Intraregional trade, which will be particularly badly affected, is projected to fall by 24% in value terms, with highly adverse impacts on the region’s manufacturing exports.”
The report also indicated that the World Trade Organization (WTO) projected a 9.2% fall in the volume of world goods trade for 2020, which would be less than the drop in 2009 during the global financial crisis.
ECLAC stated, “The crisis caused by the Covid-19 pandemic will represent a turning point for many global value chains, either because some of its suppliers have been forced off the market or because of the reshoring of some of their components. Resilience will therefore be one of the main concerns in logistics, and new opportunities will open up for suppliers able to provide diversified, flexible and high-quality services. In a global context of further regionalisation of production, less multilateral cooperation and greater protectionism, regional integration must play a vital role in the strategies followed in Latin America and the Caribbean to exit the crisis.”
At a press conference to launch the new edition of ECLAC’s flagship annual report last week, “International Trade Outlook for Latin America and the Caribbean 2020” ECLAC’s executive secretary Alicia Bárcena said, “It is necessary to deepen integration to drive the regional recovery.”
She said, “The region has been disintegrating in terms of trade and production since the middle of the last decade, coinciding with its lowest growth in seven decades. This is very worrisome, because intra-regional trade is the most conducive to productive diversification, the internationalisation of companies especially MSMEs (micro, small and medium enterprises and gender equality.”
Convergence and collaboration were needed now more than ever Bárcena said.
“Greater convergence is needed between distinct integration mechanisms in order to overcome the fragmentation of the regional market and to support a sustainable and inclusive recovery.”
She also encouraged greater participation of female workers and business owners.
ECLAC’s report stated that international tourist arrivals worldwide fell by 65% in the first half of 2020 compared to the same period in 2019, with the number of passengers carried by airlines worldwide in May and June 2020 plummeting by 91% and 87%, respectively, with respect to the prior-year period.
In the Latin American countries, the greatest collapse entailing flight cancellations occurred in April and May, when the volume of revenue passenger kilometres (RPK) indicator fell by more than 95% year on year.
In the first half of 2020, regional exports of goods and services fell in value terms by 16% and 30%, respectively.
The report stated, “This difference is explained mainly by the halt in tourism from April onward, which resulted in a 53% decrease in income on the region’s travel account. Exports of services fell across all categories, while exports of goods were up only in crop-farming and livestock products. Imports of both goods and services recorded double-digit falls across all categories.”
ECLAC is recommending that convergence in trade facilitation, improvement of regional transport and logistics infrastructure and cooperation on digital matters will make Latin America and the Caribbean more competitive adding that the Covid-19 crisis offered an opportunity to speed up the digitalisation of trade-related procedures.