Latin America and the Caribbean’s Exports Show Slight Rebound

Goods Exports Rebound, Service Exports Slow

The Inter-American Development Bank (IDB) has reported that the value of goods exports from Latin America and the Caribbean (LAC) rose by 3.2 percent year-on-year in the first half of 2024, rebounding after a 1.6 percent decline last year. According to the IDB’s latest report, “Bucking the Trend: The Potential of Knowledge-based Services,” this improvement was due to increased export volumes and the stabilization of prices relative to 2023.

However, the report also notes that the most recent indicators do not yet confirm a sustained recovery in the region’s exports. Service exports slowed slightly in the first quarter of 2024, growing at 9.5 percent compared to the average of 12.2 percent last year. Nevertheless, this growth remains well above the global average of 7.1 percent.

Knowledge-based Services Show Resilience

Paolo Giordano, Principal Economist at the IDB’s Integration and Trade Sector, who coordinated the report, noted that “after the rebound that followed the pandemic, goods exports from Latin America and the Caribbean have returned to a low-growth trajectory amid more pronounced global fragmentation and highly volatile prices. By contrast, exports of services, especially knowledge-based services, have proven resilient and dynamic.”

Export Prices and Volumes

Export prices in Latin America and the Caribbean fell by 0.5 percent in the first half of 2024, building on the 2.3 percent drop of 2023. Export volumes increased, growing at 3.3 percent, up from one percent the previous year. Import prices fell even more sharply (-3.1 percent) than export prices, improving the region’s terms of trade.

Challenges and Opportunities

The report concludes that the external environment entails significant uncertainty and downside risks, mainly due to geopolitical tensions, industrial policies, rising protectionism, and the impact of climate change. Macroeconomic conditions remain challenging, which may constrain external demand and heighten the volatility of commodity prices.

The report includes an in-depth analysis of the long-term potential of knowledge-based services, with business and computer services standing out for the region. Over the last decade, exports of knowledge-based services have grown at an annual average rate of 4.7 percent in Latin America and the Caribbean, outpacing exports of goods and overall services.

Conclusion

To unlock the potential of this fast-growing segment of global trade, Latin America and the Caribbean must address the internal challenges underlying its productivity gap. This includes human capital, digital infrastructure, the business climate, and access to finance. The region must also tackle external barriers that restrict access to international markets and undermine competitiveness.

FAQs

* What is the current state of goods exports from Latin America and the Caribbean?
+ The value of goods exports from Latin America and the Caribbean rose by 3.2 percent year-on-year in the first half of 2024, rebounding after a 1.6 percent decline last year.
* What is the growth rate of service exports in the region?
+ Service exports slowed slightly in the first quarter of 2024, growing at 9.5 percent compared to the average of 12.2 percent last year.
* What is the potential of knowledge-based services in the region?
+ Knowledge-based services have grown at an annual average rate of 4.7 percent in Latin America and the Caribbean over the last decade, outpacing exports of goods and overall services.