In the latest edition of the document entitled “International Trade Outlook for Latin America and the Caribbean,” the United Nations regional commission also indicates that services exports will increase at a double-digit rate for the fourth straight year.

After falling by 1% in 2023 in a context of contracting global trade, regional goods exports will recover in 2024, the Economic Commission for Latin America and the Caribbean (ECLAC) indicated today upon releasing a new edition of its annual report on the region’s foreign trade.

The report International Trade Outlook for Latin America and the Caribbean 2024: Reconfiguration of global trade and options for regional recovery was presented today at a press conference by ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs. According to the document, the value of the region’s goods exports will grow by 4%, reflecting a 5% expansion in volume and a 1% decline in prices. Imports, meanwhile, are forecast to rise 4% in volume while falling 2% in price, leading to a 2% projected increase in their overall value.

By sector, the greatest projected increase in value will be seen in agricultural exports (11%), followed by mining and oil (5%) and manufactured goods (3%). By subregion, it is estimated that the biggest increases will occur in the Caribbean (23%) and South America (5%). This high figure for the Caribbean is due mainly to a marked increase in the volume of oil shipments from Guyana and Suriname. In South America, the increased export volume of agricultural products such as soy, corn and wheat is most notable. The estimated increase in the value of exports from Mexico and Central America – which are more intensive in manufactured goods – is below the regional average (2% and 1%, respectively). By trading partner, the projections point to increased exports to China (6%), the United States (4%) and the European Union (3%); in contrast, intraregional exports are seen falling by 5%. With that result, the intraregional trade ratio would fall from 14% in 2023 to 13% in 2024.

Meanwhile, ECLAC forecasts that the value of regional services exports will increase by 12% in 2024. This would be the fourth straight year in which these exports grow at double-digit rates, driven mainly by tourism and modern services that are provided digitally. Regional services imports, however, are projected to grow by just 1% in 2024, in line with the weak dynamism of economic activity.

Despite the recovery in regional goods and services exports, the report warns that the significant challenge of diversifying them and making them more knowledge intensive remains. The complexity of this challenge is even greater in a global context in which geopolitical tensions and rising protectionism call into question the type of globalization that has prevailed in recent decades, it adds.

“The implementation of productive development policies with a focus on clusters, sustained over time and based on close public-private cooperation, is an ideal mechanism both for progress in this area and for a more competitive region amid the ongoing reconfiguration of global value chains,” indicates the Executive Secretary of the United Nations regional organization, José Manuel Salazar-Xirinachs.

In its second chapter, ECLAC’s report addresses the role of trade in Latin America and the Caribbean’s food security. It notes that the successive crises that have battered the world economy in recent years have caused setbacks for attaining target 2.1 of the Sustainable Development Goals, which seeks to end hunger and ensure access by all people to safe, nutritious and sufficient food all year round by 2030.

According to the document, in Latin America and the Caribbean, hunger affected 41 million people (6.2% of the region’s population) in 2023 (4.7 million more than in 2019). The prevalence of hunger in the Caribbean (17.2%) is roughly triple the figure recorded in South America (5.2%) and Central America and Mexico (5.8%). In 2023, 30.3% of adult women in Latin America and the Caribbean suffered moderate or severe food insecurity, 5.2 percentage points higher than the rate for men. Food insecurity also disproportionately impacts rural populations (32.2%) compared to urban populations (26%).

In this regard, international trade plays a crucial role in food security. Imports provide access to food that is impossible or cost-prohibitive to produce locally, whether because of climate conditions or a lack of available land or technology. They can also supplement local production during temporary shocks, such as pest infestation, conflicts or extreme weather. Moreover, the income generated by exports can be used to purchase food.

Latin America and the Caribbean is the world’s leading net food exporter. Its food exports reached a record high of $349 billion dollars in 2022. South America accounts for the bulk of the region’s exports and surpluses, while the subregion comprising Central America and Mexico runs a small surplus and the Caribbean has a persistent deficit. The value of food imports represents more than 20% of total goods and services exports in 15 of the region’s countries, 12 of which are in the Caribbean.

ECLAC sustains that strengthening regional integration is essential for a more stable and lower-cost regional food supply. An integrated regional market expands the supply of food and inputs from nearby sources, which reduces exposure to supply shocks from third markets. In addition, greater regional integration encourages the creation of production chains that promote economic and social development by generating employment, which contributes to greater food security.

To strengthen the contribution of trade to food security in the region, the report recommends making progress in the following areas: 1) trade facilitation for food products (full implementation of electronic single windows, the streamlining of border inspections, etc.); 2) harmonization or mutual recognition of sanitary, phytosanitary and technical standards; 3) improved food trade logistics, especially in the Caribbean; 4) strengthening the network of trade agreements between countries and blocs in the region; and 5) coordination in multilateral forums.

In its third chapter, ECLAC’s document examines the potential of services to boost regional exports. In a context of stagnation of per capita income in Latin America and the Caribbean in the last decade and sluggish growth in the volume of its goods exports (1.6% annually for the 2014-2023 period), services exports could be a new driver of external sector growth. In 2023, regional services exports surpassed pre-pandemic levels, totaling $221.7 billion dollars. However, services represent just 14% of the region’s goods and services exports, well below their share at a global level (25%).

Among the service sectors that stand out are tourism, transportation and modern, digitally provided services. This last category had their biggest share as a proportion of exports from MERCOSUR (59%), and their smallest share in the Caribbean Community’s (CARICOM) shipments abroad (10%). Tourism is the main services export in all the subregional blocs, with the exception of MERCOSUR.

The report concludes that in order to harness high global demand for modern services, the countries of Latin America and the Caribbean should strengthen their productive policies in partnership with the private sector. Among the priority areas are improving the measurement of services trade, strengthening the population’s digital and language skills, closing digital infrastructure gaps, and implementing programs geared towards promoting services exports and attracting Foreign Direct Investment (FDI). FDI in particular is key to bringing in new technologies, improving productivity, and generating clusters and value chains around services.