An economic retrospective of the last years in Latam

International organizations such as the World Bank and ECLAC, trust in a recovery by 2021 .

Merchandise in port

Organizations evaluate strategies to improve and recover the development of trade after the pandemic. / Photo: Unsplash

LatinAmerican Post | Belisario Chacon

Listen to this article

Leer en español: América Latina y el Caribe: Análisis en retrospectiva de una economía con futuro

Five months after the Covid-19 coronavirus infections were declared a pandemic, how has Latin America and the Caribbean coped with the situation? Through a retrospective of recent years, it is possible to analyze how vulnerable the market is and what perspective it has of being able to overcome the crisis resulting from the pandemic.

With a great biodiversity where the tropical jungle, deserts, plains and mountains are combined, and a very varied climate, fauna and flora; As well as an inexhaustible source of natural resources and multicultural diversity, Latin America has great potential to face the crisis generated by the coronavirus.

Since 2000, the region has marked a remarkable growth in the export of raw materials, especially in the food sector, achieving an important global share and, becoming the largest net supplier of food products for 2015, even surpassing North America. This trend according to a report to date from the Food and Agriculture Organization of the United Nations (FAO) would continue, and by 2024 it would be said that the net trade in agricultural products would reach US $ 60 billion, according to the State of Agricultural Commodity Markets, SOCO.

However, for 2016 the situation changes and an economic slowdown is beginning to be noticed. The report on the Latin American situation of the BBVA research portal explains that it is due to a decrease in commercial exchange due to the fall in international prices of raw materials exports .

Despite this, as the report continues, the marked presence of Latin America as the main exporter to Europe, Asia and Africa is evident, especially of products such as oil, with Ecuador, Cuba, Colombia, Panama and Venezuela being its main producers; gas from Bolivia; copper and lithium are exported by Chile.

Among agricultural products, soybeans are exported from Argentina and Paraguay; coffee from Salvador, Colombia and Nicaragua; bananas, Costa Rica and, the Dominican Republic and Cuba, sugar. Among the industrial products, Mexico stands out, with clothing and footwear; Brazil, with transport equipment.

For 2017, there was a slight recovery of the economy as a result of the increase in the prices of raw materials, greater international demand and policies to reduce inflation, especially in South America, this allowed an increase in GDP by 1, 3%

2018 was marked by a slowdown in the economy, with GDP standing at 1.2%, only Brazil and Mexico were the countries that achieved the highest GDP rate, with 1.89 trillion and 1.22 trillion US dollars respectively, data shown in the Statista portal on LAC GDP by country

Also read: Are we drinking more alcohol during quarantine?

By 2019, a slowdown was seen in the region, marked by internal political and economic problems in the countries with the greatest movement of goods such as Argentina, Brazil, Mexico, Chile and Peru, as could be observed in the movement of goods. ports in the region, which only showed an increase in container activity of only 0.04% compared to 2018, as shown in the ECLAC Port Report , where it also analyzes the effect of Covid-19 in this area.

In the report Latin American Economic Outlook 2019: Development in transition of ECLAC, with the collaboration of CAF and OECD ; It was already forecast that the Latin American economy would have a decline, especially due to international tensions, and a marked drop in the price of raw materials or commodities.

This makes one think about the new economic model that should be followed, as indicated by an analysis on the CAF website: “growth cannot be sustained indefinitely at the expense of the exploitation of raw materials” and continues: “… it is necessary to have vigorous production lines and a solid business fabric to guarantee sustainable economic development that includes the vast majority of citizens ”.

In the same way, ECLAC establishes that an economic model whose vision is short-term should not be followed, and indicates: “… it is unsustainable due - broadly speaking - to the fact that the economy is closely associated with volatile markets with lower growth in production and trade, with a decoupling of the financial system, linked to high inequality, with great social, political and environmental consequences ”.

Despite the fact that the statistics of all international organizations show negative balances, Latin America is a huge market that promises a lot for the future, investors know it, the only thing missing is solid integration through clear and concise agreements that go beyond political ideals. The region will resurface in 2021, although on a greater or lesser scale by country.