Latin America's imports are projected to decline by 9.8% in 2015, according to a report issued by the the Economic Commission for Latin America and the Caribbean (ECLAC) in October. The imports of the region are expected to go down to 974 billion dollars in 2015 from 1082 billion in 2014 and 1087 billion in 2013.
Brazil will have the highest decrease in imports with 22.6%, followed by Ecuador-20.9%, Venezuela-15.7%, Colombia-13.8%, Chile-13.7%, Argentina-9.9%. However, Mexico's imports are expected to drop by just 1% and Peru- 5.5%.
While the South American sub region will experience a fall in imports of of 16.7%, Central America will have just 3.4%
The region's exports are estimated to shrink by 13.8 % in 2015 to 914 billion dollars from 1060 billion in 2014 and 1089 billion in 2013. There is a possibility of further decline in exports in 2016, going by the current trends in the global market.
Venezuela will have the highest fall in exports by 40.6 %, followed by Colombia-29.2%, Argentina-16.9%, Chile-16.8%, Peru-16.3%, Brazil-15.1%. But Mexico's exports are projected to decrease by just 4.1%.
The South American sub region will suffer a decline in exports by 21% while Central America will have a drop of just 3.7%.
The year 2015 will be the third consecutive year of decline in Latin American exports. This has made the three-year period from 2013 to 2015 as the region’s worst in terms of export performance in the last eight decades.
The sharp drop in international prices of crude oil, metals, minerals and agro products exported by the region, the decline in demand from China, the weak economic recovery of Euro zone and the general slow down in global growth are the main factors for the decrease in exports. The steep fall in crude oil prices have affected Venezuela and Ecuador severely while the impact is moderate in the cases of Mexico and Colombia, the main exporters of the region.
The South American countries which are more dependent on China have suffered steeper fall in their exports while Mexico and Central America whose main market is US, have suffered only marginally.
Most of countries of the region are expected to ride out the current situation with their high forex reserves, low external debt, macroeconomic resilience and prudent policies. It is important to note that Brazil, Argentina and Chile are likely to end the year with trade surplus despite the fall in their exports.
The currencies of most of the countries in the region have depreciated since mid-2014. This has made imports more expensive and given boost to exports. For example, the Brazilian Real has depreciated by sixty percent in the last one year from 2.46 Reais to 3.94 for a dollar. Foreign currency conversion is open and transparent in most countries of the region except in Venezuela and Argentina which have imposed severe restrictions on imports and foreign currency transactions due to inadequate foreign exchange reserves.
The Indian exporters need not be alarmed by the fall in imports of Latin America. India's exports have increased from 12.31 billion in 2013-14 to 13.75 billion in 2014-15 despite the fall in the imports of the region from 1083 billion in 2013 to 1082 billion in 2014. In fact, India's exports have tripled in the last five years from 4.47 billion in 2009-10, although the GDP growth rate of the region has fallen from 6.2% in 2010 to 1.1% in 2014.
source: ECLAC report http://repositorio.cepal.org/bitstream/handle/11362/39011/S1500865_en.pdf?sequence=1