The goods exported from Latin America and the Caribbean are growing in value, with China increasingly sourcing raw materials from the region.
Thanks to the growing prices for oil and minerals, the value of regional goods exports rose 9.7% in the first quarter of 2018, according to the latest projections from the Economic Commission for Latin America and the Caribbean (ECLAC).
“This increase can be broken down into a 7.6% increase in prices and a 2.1% rise in volume,” stated the UN agency, adding that this is the second straight year of growth after the notable decline seen between 2012 and 2016.
The region still lags behind many major developing economies elsewhere in the world, because their export volume is expanding by an average 4.6%.
The region’s goods imports are also projected to rebound in 2018, with the agency expecting it to grow more in volume (4.9%) than in price (4.6%).
Many countries in South America are exporting a large amount of oil and mineral-based products to China. Exports to China have jumped 28% this year.
Considering the report, Trinidad and Tobago has become one of the biggest beneficiaries of the recent surge in oil prices.
“In contrast, exports within the region and to the United States, which tend to have greater manufactured content, are seen growing at significantly lower rates (12% and 7.1%, respectively),” the report noted.
However, Mexico and a few countries in Central America are capitalizing on the strong economic growth in the United States, escalating their exports to the world’s largest economy.
The UN agency says the trade tensions between the United States and China will have a positive impact on the regional exports for a short term. However, the entire global economy, including Latin America’s, will be hurt if the trade war continued.
ECLAC has urged regional governments to diversify their economies, warning that their heavy reliance on mineral exports would curtail growth in other sectors.
“Regional integration is indispensable for making progress on the diversification of exports and on the transition toward a more knowledge-intensive export basket, considering the elevated industrial content of intraregional trade and its importance for SMEs that export,” said Alicia Bárcena, ECLAC’s Executive Secretary.