Countries in Latin America and the Caribbean are beginning to show signs of economic recovery and an increased volume of exports, including new products in higher quality niches, according to the new semianual World Bank report on Latin America and the Caribbean, “The Big Switch: Restoring Growth through Trade.”

The region is expected to contract by 1.1 percent in 2016 but to recover to 1.8 percent in 2017, according to the Consensus Forecasts. Such recovery is attributed largely to a rebound in South America, where growth is expected to reach 1.5 percent in 2017.

“The regional slowdown seems to finally be coming to an end, with average growth expected to turn positive in 2017,” said Augusto de la Torre (photo), World Bank Chief Economist for Latin America and the Caribbean.

The report explains that in the new reality of lower commodity prices the region can no longer depend on domestic demand to boost growth, as it did during the bonanza years. A turn toward outside buyers will be crucial to boost economic activity.

However, just when the region seems ready to make the necessary efforts to strengthen its presence in international markets, the world seems to be going in the opposite direction, as the volume of global trade is flattening if not declining, pulled down by a contraction in the volume of imports from China and East Asia, more broadly.

The good news is that some preliminary evidence now shows that countries in the region are already increasing production of exports including new, higher quality products that are finding niche markets in the U.S. and Europe. Moreover, the more competitive exchange rates, obtained during the adjustment of the past two years, open the space for greater regional trade by replacing imports from outside the region with products and services efficiently produced within the region. The report also finds that countries with a flexible exchange rate are diversifying their exports and export destinations.