Monday, October 30, 2017

Commodities Dominate Latin American Exports

The Economic Commission for Latin America and the Caribbean has a new report that is a "glass half-full/half-empty" type of thing. The value of Latin American exports increased 10% in 2017 but it was based almost entirely on commodities. Processed goods and technology seriously lag behind.

The regional export basket is dominated by basic products such as raw cane sugar, coffee (not roasted or decaffeinated), soybeans, soymeal, maize and frozen beef. In contrast, the region shows a poor export performance in processed products. 
According to ECLAC, the current high concentration in raw materials imposes the urgent challenge of “decommoditizing” the export basket, which is also true of other sectors related to natural resources. 

This has been a policy suggestion for about 60-70 years. Mexico and Brazil have shown some success but too little has changed.

Also of interest, and certainly no surprise, is that trade with China and the rest of Asia is growing more rapidly than anywhere else.

the recovery in regional exports in 2017 will be led by shipments to China and the rest of Asia (23% and 17% value increase, respectively) while exports to the United States and within the region will expand at a rate near the average (9% and 10%, respectively). Meanwhile, sales to the European Union will be less dynamic (with a 6% increase).

China is establishing a relationship whereby it exports manufactured goods and imports raw materials. It has been even more active in pursuing such ties after Donald Trump's election, and before that had been focusing on increasing the import of food from Latin America.

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