As Latin America and the Caribbean continue to peer tentatively into the coronavirus dark tunnel of uncertainty, the Economic Commission for Latin America and the Caribbean (ECLAC) has hit the region with more gloomy news regarding its projected economic performance in the period ahead.
At a press conference last Friday, where the UN Commission created to encourage regional cooperation unveiled its Special Report COVID-19 #6, it is projecting a staggering 23% decline in Latin America and the Caribbean’s foreign trade this year.
Some of the grimmest news regarding the economic performance of the hemisphere, going forward, comes from the Caribbean, the area likely to be most affected by a projected overall 50% COVID-19-driven regional contraction of the tourism industry. High economic dependence on tourism across several Caribbean states coupled with weak response-capabilities in times of crisis means that the Caribbean, as a whole, is likely to be the worst-impacted by the tourism decline.
ECLAC, meanwhile, is further projecting that the overall value of imports into the Latin America and the Caribbean this year will shrink by 25%, a level that exceeds the 24% decline in the value of imports recorded during the 2008-2009 financial crisis. The commodities likely to be most affected by the decline in imports are manufactured goods, minerals and fuel.
The decline in the region’s trading activity, according to the report, is taking place against the backdrop of a 17% decline in the overall volumes of international trade between January and May this year. Latin America and the Caribbean, it adds, is the developing region most affected by this phenomenon.
Meanwhile, the report projects that intra-regional trade is likely to contract by around 23.9%, a circumstance that will impact particularly severely on manufactured goods and result in a loss of industrial capacity.
At last Friday’s media briefing, ECLAC Executive Secretary Alicia Barcena alluded to the need to “rekindle the vision of an integrated Latin American market” and for the affected countries to “reduce costs through efficient, smooth and secure logistics.”
According to the report the first five months of 2020 witnessed sharp declines in the value of Latin American and Caribbean shipments of exports to the United States (-22.2 %), the European Union (-14.3 %) and within the region (-23.9 %), which together absorbed 69 % of its total goods exports in 2019. Imports during the same period fell in all countries by 17.1% due to “deep recession” in the region. Particularly worrisome, the report says, is the contraction in the importation of capital goods and intermediate inputs (-14.5 % and -13.6 % respectively), which will affect the investment rate and will compromise the recovery, ECLAC warns.
