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International Trade Outlook for Latin America and the Caribbean 2019

Adverse Global Conditions Leave the Region Lagging Further Behind

image of International Trade Outlook for Latin America and the Caribbean 2019

The global trade performance in 2019 was the worst since the international financial crisis. This edition of International Trade Outlook for Latin America and the Caribbean analyses that performance, as well as the mounting trade tensions and their repercussions for the region’s own trade. The heavy slowdown in global trade is the result of the build-up of trade barriers since 2018, as well as longer-standing factors, including weaker global demand, increasing import substitution in some economies, the smaller share of Chinese production going for export, the shrinking of global value chains and the emergence of new technologies that impact the very nature of trade. Chapter II analyses how international trade could contribute more to environmental sustainability. Trade has both positive and negative impacts on the environment and the net balance of that effect is uncertain. The links between trade and the environment have become more visible since the 1990s; the increase in environment-related trade disputes testifies to this, as does the fact that environmental chapters are increasingly being written into trade agreements. Finally, the third chapter examines the situation regarding infrastructure and logistics, which are key to international trade and production. In conclusion, public policies on economic infrastructure concessions need to be re-examined, considering the crucial role played by the State in regulation, especially in overseeing competition.

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Presentation

The global trade performance in 2019 was the worst since the international financial crisis. Chapter I of this edition of International Trade Outlook for Latin America and the Caribbean analyses that performance, as well as the mounting trade tensions and their repercussions for the region’s own trade. The heavy slowdown in global trade is the result of the build-up of trade barriers since 2018, as well as longer-standing factors, including weaker global demand, increasing import substitution in some economies, the smaller share of Chinese production going for export, the shrinking of global value chains and the emergence of new technologies that impact the very nature of trade. The trade tensions reflect economic and technological competition between China and the United States, the rupture of the pro-globalization consensus of the 1990s and 2000s, and growing criticism of the functioning of the World Trade Organization (WTO). The uncertainty caused by the current tensions is adversely impacting the economies most bound into global value chains, especially in Europe and East Asia. In this context, the value of the region’s merchandise trade will likely drop by 2% on the export side and 3% in the import side in 2019, although this pattern will be highly uneven from one subregion to another. Meanwhile, the value of intraregional trade will tumble by some 10%, continuing the procyclical pattern of the region’s trade seen in recent years, whereby it amplifies the drop in the region’s overall exports.

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