BASSETERRE, St. Kitts – TRADE in the region is expected to experience a large contraction this year, according to the latest economic report by the United Nation’s (UN’s) Economic Commission for Latin America and the Caribbean (ECLAC).
In its report “Latin America and the Caribbean in the World Economy 2008-2009: Crisis and opportunities for regional cooperation”, launched earlier this week, ECLAC estimated a 13% decline in trade in 2009, an unfavourable projection compared to the expected 10% reduction in world trade for this year.
Detailed analyses in the report reveal that the volume of exports from the region will decrease by 11%, which is considered the “worst figure” since 1937. Imports will also see a fall of 14%, the largest decline in the last 27 years.
In the 2009 report, the significant reduction in regional trade was attributed to a similar contraction of world demand, lower prices of a number of basic commodities and difficulties in financing trade.
During the launch of the economic report, ECLAC Executive Secretary Alicia Bárcena stressed the need to stimulate trade within the region. The report informs that almost every country in the region has experienced a fall in trade flows with its main trade partners.
"Policies to reactivate trade are urgently needed because the post-crisis future will continue to reward economies with a greater focus on exports and advances in terms of competitiveness and technological innovation," Bárcena said.
The report identified foreign direct investment, emigrant remittances, commodity prices and trade as areas that felt the brunt of the negative spinoffs. It added that services and tourism also suffered the effects of the crisis. However, the report estimated that after a two to three-year slowdown, international trade should “once again become a source of opportunities, and the region should be prepared for that”.
The report not only gave projections of decline in regional trade, but also outlined a number of recommendations for a regional response to the ongoing crisis.
The report stated, “With regard to trade, ECLAC suggests creating a programme for cooperation to stimulate intra-regional trade, coordinate the participation of countries and multilateral and regional bodies to make the most of their advantages, and strengthen the mobilization of financial resources.”
There was a call to diversify the productive and export base and incorporate greater value in exports of goods and services. According to ECLAC, this requires “greater coordination” within governments and with the private sector to “stimulate innovation”.
