Latin American exports grows in 2007

12 Dec '07

3 min read

Latin American exports rose 11% in 2007 over last year, reaching a record US$715 billion, according to preliminary data published by the Inter-American Development Bank.

While the region's exports are poised to increase for the fifth year in a row, their growth rate is lower than in the three previous years, when it averaged more than 20% annually.

The probability of maintaining such high levels of growth in the near future decreased this year, according to an analysis published by the IDB's Trade and Integration Sector.

"A major challenge facing the region is a likely slowdown, or possibly even a recession in the United States resulting from the recent credit crisis," the analysis said. "Similarly, the appreciation of some of the region's currencies, such as the Brazilian real, vis-à-vis the U.S. dollar appears to have contributed to some stagnation on these countries' exports to the U.S. this year."

Competition from Chinese manufacturers may also weigh down Latin America's export performance, particularly for countries such as Mexico and some Central American nations. Any intensification of this competition would further hinder their maquila sectors.

While in recent years Latin America has reaped the benefits from a boom in commodities, prices for key exports could decline in the medium term, "especially if demand from China slows," the analysis said.

Counterbalancing those negative factors, there are indications that the global economy might be able to quickly overcome quickly a slowdown in demand from the United States. Latin American exports would continue to profit from sustained demand from China and a greater diversification of intra-regional trade, as well as from the implementation of new pacts such as the DR-CAFTA free trade agreement between the United States, the Dominican Republic and Central America.

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