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As shipping conditions and freight prices improved, external demand weakened

Exports of goods from Latin America and the Caribbean (LAC) suffered a 2.7% decline in the first half of 2023, following the slowdown observed in 2022, according to the Inter-American Development Bank’s (IDB) report “What’s Next: Strengthening Competitiveness in the Face of Food Security Demands and Climate Change”. Despite the drop, the deterioration was less than the world average, and some economies, particularly Brazil and Mexico, maintained a positive momentum, especially in terms of quantities exported.

South America: Trade contrasts 

In South America, exports increased significantly by 16.2% in 2022, but experienced a 6.8% drop in the first half of 2023. Most countries in the region experienced declines in this period, with the exception of Brazil, Chile and Paraguay. Argentina, Bolivia, Paraguay, Uruguay, and Venezuela recorded declines in imports in 1H2023, although Argentina stood out due to the drought that affected wheat, soybean, and corn production. Bolivia saw a decrease in shipments of natural gas, soybean derivatives, zinc, tin and gold, while Colombia, Ecuador and Venezuela experienced a drop in oil exports. Uruguay, meanwhile, reduced its exports of meat and agricultural products, and in Peru, copper and natural gas shipments also declined.

Brazil’s momentum was led mainly by agro-industrial exports, compensating for the drop in prices with a significant increase in quantities. Paraguay experienced an increase in soybean exports, recovering from the drought suffered in 2022, and Chile stood out with higher exports of chemical products, copper concentrates and fruit.

In the Caribbean, exports declined in the first half of 2023, following an increase in 2022. Performance was heterogeneous among the countries in the region.

The strength of Brazil and Mexico 

The relative outperformance of LAC exports in 2022 and the first half of 2023 is mainly attributed to Mexico and Brazil, the region’s two leading exporting economies. In Mexico, the momentum was derived from automotive exports to the U.S., while, in Brazil, the expansion was based on the agricultural sector, with notable shipments to both China and other major destinations.

Brazil recorded exports of US$334.1 billion in 2022, up 19.0%, driven by prices and quantities. Despite a 6.6% decline in prices in the first half of 2023, the strong increase in volumes (7.9%) boosted the value of external shipments (0.7%). Agro-industrial exports in this period were the most dynamic (4.5%), highlighting the strong expansion of quantities (8.0%), mainly in the soybean complex shipped to China.

Foreign markets 

Total imports from LAC’s main trading partners slowed in 2022 and contracted in the first half of 2023. Despite this overall trend, purchases to LAC from the United States, China, the European Union and the region itself maintained a better relative performance.

Total U.S. imports increased by 15% in 2022, and purchases from LAC increased by 20.1%. In the first half of 2023, total U.S. purchases fell by 7.2%, while those originating in the region increased by 3.8%. 

In the European Union, total imports grew by 14.8% in 2022, and purchases from Latin America and the Caribbean increased by 20.4%. In the first half of 2023, European purchases fell by 4.2%, and those originating in the region declined less (-3.0%). 

Total imports from China increased by 1.2% in 2022, and purchases from LAC rose more, by 7.1%. In the first half of 2023, total Chinese purchases fell by 6.6%, and those originating in LAC slowed (0.9%).

Finally, total imports from Latin America and the Caribbean increased by 20.7% in 2022, and those originating in LAC itself rose by 21.0%. In the first half of 2023, Latin American purchases from the world fell by 3.2%, and those originating in LAC fell less (-2.3%). Although the better relative performance of purchases from the region stands out, all trade flows were characterized by a contraction trend in 2023.

Future outlook 

The report concludes that, over the course of 2023, the end of the post-pandemic trade rebound was evident. As shipping conditions improved and freight rates returned to pre-pandemic levels, external demand weakened. Although LAC’s trade performance was above the world average, goods exports entered a phase of contraction due to a fall in prices and a progressive weakening of real flows.

The analysis also highlights that “in a broader perspective, after the sequence of shocks of the last few years, an increasingly challenging trade environment for the region is foreseen. The forecasts of less structural dynamism in global trade, the new boom in industrial policies and the incorporation in trade policies of objectives associated with the transition to low-emission economies will have an impact on the region’s ability to participate in world markets. But this environment also offers opportunities. One of the sectors with potential is food, which is key to global food security due to the importance of LAC in world production and trade,” he concludes.