Countries in Latin America and the Caribbean are be-ginning to show signs of economic recovery and an increased volume of exports, including new products in higher quali-ty niches, according to the new semianual World Bank report on Latin Ame-rica and the Caribbean, “The Big Switch: Restor-ing Growth through Trade.”
The region is expec-ted to contract by 1.1 per-cent in 2016 but to recover to 1.8 percent in 2017, according to the Consensus Fore-casts. 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 avera-ge 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 domes-tic demand to boost growth, as it did du-ring 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 vo-lume of imports from China and East Asia, more broadly.
The good news is that some prelimi-nary evidence now shows that countries in the region are already increasing produc-tion of exports including new, higher qua-lity products that are finding niche markets in the U.S. and Europe. Moreover, the mo-re 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 re-gion with products and services efficiently produced within the region. The report al-so finds that countries with a flexible ex-change rate are diversifying their exports and export destinations.