Latin American exports to the world grew by a projected 29 percent in 2010, to approximately $853 billion, reversing a 23 percent fall in 2009, according to preliminary estimates by the Inter-American Development Bank’s Integration and Trade Sector.
Exports within the region grew 27 percent, while flows outside expanded nearly 30 percent. Regional trade as a share of Latin America’s total trade with the world stands at an estimated 17.5 percent, slightly lower than last year’s 17.8 percent.
Trade with China in particular has provided a counterbalance to weak demand in the developed countries. In the case of Brazil and Chile, exports to China did not suffer to the same extent as they did to the rest of the world during the crisis period, and in fact exhibited positive growth for some months. Furthermore, Latin America’s overall exports to China grew nearly 50 percent this year over 2009 levels.
Other findings by the development bank include:
Exports by Mercosur and the Andean community each grew by 28 percent. Paraguay led the Mercosur regional grouping with 39.7 percent growth in total exports, while Brazil, Uruguay, and Argentina saw their exports grow by 29.7, 24.6, and 24.0 percent, respectively.
In the Andean Community, exports by Peru grew 35.2 percent, Ecuador 28.8 percent, Bolivia 27.5 percent, and Colombia 21.2 percent.
Chile once again experienced substantial export growth driven by more favorable copper prices and dividends from the government’s growing number of trade agreements, among other factors. Chile’s exports rose 38.5 percent. Chilean exports to China, its top destination of exports, grew by nearly one-half.
Mexico’s exports are projected to grow by a third this year, more than offsetting last year’s 21 percent decline. Overall results for both 2009 and 2010 closely tracked trade patterns with the U.S., Mexico’s largest trading partner. Sales to Mexico’s Central American Common Market neighbors to the South are on track to grow 29.2 percent. Central American exports, which fell by less than the other Latin American subregions last year, similarly rose by a more muted 14.1 percent in 2010. Nicaragua (30.0 percent) posted the strongest results, while Guatemala, El Salvador, Honduras, and Costa Rica grew at respective rates of 16.0, 15.9, 13.8, and 9.1 percent. It should be noted, however, that these estimates may not capture all of the effects of the recent Central American Free Trade Agreement, as all data are not yet available for all countries.
The overall recovery in exports is fragile and depends on a number of external factors. Slower than expected growth in the U.S., or a deepening of the debt crisis in the Euro zone, could cause demand for Latin America’s exports to fall once more. Also, some of the growth is due to the strengthening of commodity prices in 2010. Diversification towards the Chinese market helped mitigate the damage from the recent crisis, but a double-dip global recession or prolonged slowdown would likely reduce China’s demand for the region’s primary products.