After growing 28% in 2021, the value of exports in Latin America and the Caribbean will increase 22% in 2022, projected the Economic Commission for Latin America and the Caribbean (ECLAC).
Above all, this result would be driven by the increase in export prices rather than volumes, as these are affected by a decrease in external demand.
As for imports, ECLAC expects a growth of 23%, after the 37% increase recorded in 2021.
Again, this mainly reflects higher prices, as volume growth is affected by slower economic growth.
Persistently high international energy prices, disruptions in global supply chains and high transportation costs have been passed on to domestic production costs, feeding back into a global inflationary process, which also manifests itself in the prices of products that countries export and import.
As a result of the projected evolution of exports and imports, the region’s goods account balance is again projected to show a surplus, although somewhat smaller than in 2021 (0.3% of GDP, compared to 0.4% of GDP in 2021).
The direct trade impact of the war between the Russian Federation and Ukraine is of a low magnitude in Latin America and the Caribbean; only 0.6% of the region’s exports go to those two countries and the same proportion of its imports come from them.
However, there are some countries and sectors for which these two markets are more relevant.
In the case of exports, Paraguay, Jamaica and Ecuador send 5.6%, 5.5% and 4.5% of their total exports to the Russian Federation and Ukraine, respectively.
With regard to imports, the disruption of supply chains for some intermediate inputs alters specific production processes in some sectors and countries.
In Brazil, 1.8% of imports come from these two countries; in the Plurinational State of Bolivia, 1.6%, and in Paraguay, 1.2%.
ECLAC forecasts that the region’s goods account balance will show a smaller surplus than in 2021 (0.3% of GDP, compared to 0.4% of GDP in 2021).
The income balance deficit would increase in 2022, in line with higher debt interest payments abroad and higher remittances of foreign companies’ profits abroad.
The transfer balance surplus would continue to increase in 2022 (to 2.7% of GDP), mainly due to the continued growth of remittances to the region, the main item in this account.