Latin America’s exports forecast to decline by 23% and imports by 25% in 2020

Latin America’s exports and imports of goods are estimated to have fallen in value by 17% and 18%, respectively in the first half of 2020, according to the August report of the Economic Commission for Latin America and the Caribbean (ECLAC)

Worsening growth prospects for several of the region’s main markets and uncertainty over how the pandemic will evolve mean that a recovery in regional foreign trade in the second half of the year is unlikely. 

 

So ECLAC projects a 23% contraction in the value of the region’s goods exports in 2020, as a result of declines in both prices (-11%) and volumes (-12%) 

 

The largest contractions in exports in 2020 are expected in those to the United States (-32%) and to the region itself (-28%), while shipments to China are projected to fall by just 4%

 

In keeping with the trend in exports by destination, the sharpest falls in value are projected for mining and oil, and manufacturing shipments. In the case of mining and oil, this is partly a result of a steep drop in prices, while in manufacturing it is mainly because of smaller export volumes. Agricultural and livestock shipments look set to be the most resilient, with a projected increase in value of 2%. 

In 2020, oil prices are projected to fall by 40%, minerals and metals by 6.1% and agroproducts by 5.9%. The only exceptions are: gold whose prices are likely to increase by 14.9% and iron ore by 10.1%.

 

For the value of imports, the expected fall is even larger (-25%). Imports are expected to fall across the board, but the largest contraction will be in fuel purchases, owing to the fall in prices. 

 

As imports are forecast to fall more than exports, the region is expected to record a trade surplus of just over US$ 45 billion in 2020, concentrated in the countries of the Southern Common Market (MERCOSUR), Chile and Mexico. For the Andean Community, whose members have been hit hard by tumbling oil and mineral prices, a trade deficit of just over US$ 4.5 billion is projected. The Central American and Caribbean countries are expected to see their deficits shrink significantly compared to 2019.

Impact on India

 

India's import bill from Latin America will decrease in 2020 since the prices of three of its main imports from the region namely oil, copper and soy oil will decline by 40%, 12.6% and 7.8% respectively. However, the gold imports bill which were about 4 billion dollars in 2019 would go up since gold prices are predicted to go up by 15.9%.

India's exports are logically expected to go down with the general decline of 25% of the total imports of the region. However, the decrease in exports could be much less than the 25% since the region is expected to increase imports from less expensive sources such as India at this time of austerity.

More in the ECLAC report  https://repositorio.cepal.org/bitstream/handle/11362/45878/1/S2000496_en.pdf