Tumbling commodity prices and the ongoing trade war between the US and China are dealing a heavy blow to Latin America’s economies, with the Inter-American Development Bank’s (IDB) half-yearly report showing the region’s exports fell by 1.6% in the first quarter of 2019.
China has remained the biggest export market for the region, while import demand from the US and Europe is slowing down significantly as the trade war escalates.
Export of goods declined considerably in most of the countries except a few including Barbados, Suriname, and Haiti.
Countries in Central America and the Caribbean are performing moderately, but South American countries are bearing the brunt of the drop in commodity prices, according to the report.
“In the first quarter of 2019, South American exports fell by 5.4% after expanding an average rate of 8.3% in 2018. This was true of almost every country in South America,” the report added.
Exports to the European Union and within South America contracted the most (by 14.8% and 14%, respectively), while exports to China and the rest of Asia remained in positive territory.
Mexico is also struggling to increase exports despite its free trade agreement with the US and Canada.
“A combination of risk factors is affecting the outlook for regional trade,” said Paolo Giordano, an economist at the IDB’s Trade and Integration Sector who coordinated the report.
“What happens next depends largely on the outcome of current global trade tensions and whether the Latin America and the Caribbean remains on a growth path,” he said.