Since 2019, trading for Latin American and Caribbean countries showed serious signs of frailty. But the onset of the novel coronavirus has only made matters worse. In its latest report which captures the effects of the COVID-19 pandemic on trade, the Inter-American Development Bank (IDB) noted that the value of exports from Latin America and the Caribbean contracted by 3.2% in the first quarter of 2020.
The Bank was keen to note as well that in 2019, trading was already feeling the squeeze since the Latin American and Caribbean (LAC) region’s exports contracted by 2.2% on average, while global trade decreased by 2.8%. In both cases, this contraction was mainly driven by falling prices and stagnant export volumes.
Turning its attention to imports from the region’s main trade partners, the IDB said that China’s purchases from LAC stagnated (-0.1%) in the first quarter of 2020, while its total imports fell by 2.3%. It said that this trend had the greatest impact on the countries of South America as China is one of their main trading partners. Its role as a global buyer for some of the region’s main export products also affected the region through the price channel.
Although the contraction in purchases by the United States had started to slow down between late 2019 and early 2020, the Bank said that the downward trend accelerated again in March last when COVID-19 began to spread in the country. The Guyana Standard understands that imports of the United States from LAC shrank 1.0% on average in the first quarter of 2020, while its purchases from the world contracted by 4.9%. As a consequence, LAC countries for which the United States is the main trading partner, such as Mexico and those of Central America, began to feel the effects of the pandemic from March onward.
In the European Union, where COVID-19 began to spread in February and March, the Bank said that the negative trend observed at the end of 2019 continued into the first months of 2020 while noting that imports of the European Union from LAC contracted by 7.1%, more than its total imports (-4.2%).
The IDB said that the most dramatic drop was recorded in purchases from within Latin America, which contracted by 8.6%, twice as much as total imports (-4.0%). The Bank was keen to note that this figure is an omen of the difficult times ahead for intra-regional trade, since the downward trend had started before the COVID-19 pandemic began to spread through the region.