Latin American and Caribbean Exports Projected to Fall Again in 2016 – But Rate of Decline Is Slowing

Latin American and Caribbean Exports Projected to Fall Again in 2016 – But Rate of Decline Is Slowing

Since hitting in 2014, the commodity price crash has had devastating effects on economies and exports throughout Latin America and the Caribbean. Trinidad and Tobago is one that is now facing budget strains due to a lack of incoming revenue, in its case due to lower oil prices.

Because of this, the value of overall exports from the region is set to drop for the second straight year. The $850 billion in estimated exports in 2016 will be some $50 billion less than last year. The rate of decline is slowing, however, with the projected 6% fall this year being far less than the 15% plummet seen in 2015, according to a new report by the Inter-American Development Bank.

While the slowdown of the Chinese economy was more to blame in 2015, this year the biggest foreign drop was due to fewer exports to the United States. That estimated 5% fall was compounded by the 11% decline in inter-regional exports. Exports to China are expected to finish the year down 5%, while those to the European Union will fall by 4%.

The recent oil rally could help exports bounce back even further in 2017. While Trinidad and Tobago, like the region overall, has been working to diversify its economy in recent years, such an undertaking takes time. So the price of oil still has an out-sized effect, meaning that the hopes for further recovery got a huge shot in the arm this month after the spike in Brent crude following the announced production cuts by the many of world’s largest oil-producing nation.

The election of President-elect Donal Trump in the United States remains a large unknown, however. While higher oil prices should be the most important factor to many nations in the region — and especially in Trinidad and Tobago — Trump’s saber-rattling about free trade could lead to lower hemisphere-wide integration and fewer exports to the United States.

“An acceleration of demand, particularly in the United States and in China, could sustain exports, but the resurgence of trade protectionism could bias the forecast,” said Paolo Giordano, principal economist of the integration and trade sector and coordinator of the report.

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