The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bรกrcena Executive Secretary Economic Commission for Latin America and the Caribbean (ECLAC) 6 August 2020
Messages 1. The cumulative fall in the volume of global trade was -17% by May 2020 2. The value of trade in Latin America and the Caribbean will fall by almost a quarter (-23%) 3. Most affected exports: those destined for the United States and the region itself 4. Worst performing sectors: manufacturing, mining and fuels 5. The collapse in tourism (-49.5%) is dragging down services exports, especially from the Caribbean
6. Imports fell in all categories of goods and to all countries 7. Strong contraction in intraregional trade, particularly in manufacturing 8. Loss of productive capacities and reprimarization of the export basket 9. Proposals: • Efficient, smooth and secure logistics • Regional integration • Industrial policies with more emphasis on technological innovation and environmental sustainability
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Global trade saw a cumulative fall of 17% by May 2020 YEAR-ON-YEAR CHANGE IN THE VOLUME OF GLOBAL TRADE IN GOODS, JANUARY 2017–MAY 2020 (Percentages) 10 5 0 -5 -10
Cumulative fall January–May: -17%
-15
ay -1 7 Ju l-1 7 Se p17 No v17 Ja n18 M ar -1 8 M ay -1 8 Ju l-1 8 Se p18 No v18 Ja n19 M ar -1 9 M ay -1 9 Ju l-1 9 Se p19 No v19 Ja n20 M ar -2 0 M ay -2 0
M
-1 7 ar
M
Ja n
-1 7
-20
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Netherlands Bureau of Economic Policy Analysis (CPB), World Trade Monitor [online database] https://www.cpb.nl/en/worldtrademonitor.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Exports from the region nose dive LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR CHANGE IN THE VALUE OF GOODS EXPORTS BY DESTINATION, JANUARY–MAY 2020, AND APRIL AND MAY 2020 (Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Only exports of agricultural and livestock products have grown LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR VARIATION IN THE VALUE OF EXPORTS BY MAJOR SECTOR, JANUARY–MAY 2019 AND JANUARY–MAY 2020 (Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
The prices of most commodities have dropped LATIN AMERICA AND THE CARIBBEAN: CHANGE IN THE PRICES OF MAJOR EXPORT COMMODITIES, JUNE 2020 COMPARED TO DECEMBER 2019
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from Bloomberg, The Economist Intelligence Unit, Buenos Aires Grain Exchange, Chilean Copper Commission (COCHILCO) and Agrarian Research and Policy Office of Chile (ODEPA).
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bรกrcena
Just four countries, all Central American, saw export growth LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR CHANGE IN THE VALUE OF GOODS EXPORTS, BY COUNTRY, JANUARY–MAY 2020 (Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
The recession has hit imports in all countries LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR CHANGE IN THE VALUE OF GOODS IMPORTS, BY COUNTRY, JANUARY─MAY 2020
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics. Note: Excluding the Colón Free Zone for Panama.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Decline in imports in all categories and from all origins LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR CHANGE IN THE VALUE OF GOODS IMPORTS, JANUARY–MAY 2019 AND JANUARY–MAY 2020 (Percentages)
BY CATEGORY
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
BY ORIGIN
Intraregional trade contracted in all integration blocs, accounting for lower share of total goods exports LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR CHANGE IN EXPORTS WITHIN INTEGRATION BLOCS, JANUARY–MAY 2020 (Percentages)
LATIN AMERICA AND THE CARIBBEAN: TRADE RATIO MEASURED BY EXPORTS WITHIN INTEGRATION BLOCS, JANUARY–MAY 2019 AND 2020 (Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics; for the Caribbean Community: International Monetary Fund (FMI), Direction of Trade Statistics (DOTS).
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Plummeting intraregional trade is taking a toll on manufacturing LATIN AMERICA AND THE CARIBBEAN: YEAR-ON-YEAR CHANGE IN THE VALUE OF INTRAREGIONAL EXPORTS BY SECTOR, JANUARY–MAY 2020
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
The collapse in tourism is dragging down services exports LATIN AMERICA (11 COUNTRIES):a YEAR-ON-YEAR CHANGE IN THE VALUE SERVICES EXPORTS, JANUARY–MARCH 2020 (Percentages)
LATIN AMERICA AND THE CARIBBEAN (SELECTED COUNTRIES): YEAR-ON-YEAR CHANGE IN INTERNATIONAL TOURIST ARRIVALS, JANUARY 2018–MAY 2020 (Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from the countries’ balance of payments. a Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Mexico, Peru, Plurinational State of Bolivia and Uruguay. These countries account for 78% and 82% of the region’s exports and imports of commercial services, respectively.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
The Caribbean hardest hit by the paralysis of tourism LATIN AMERICA AND THE CARIBBEAN (SELECTED COUNTRIES AND SUBREGIONS): PROJECTED DECLINE IN EXPORTS, GDP AND EMPLOYMENT, 2020 GOODS AND SERVICES EXPORTS (Percentages)
GDP AND EMPLOYMENT (Percentage points)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), “Recovery measures for the tourism sector in Latin America and the Caribbean present an opportunity to promote sustainability and resilience”, COVID-19 Reports, Santiago, July 2020.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Air passenger traffic all but disappears (-99%) and freight traffic falls 62.1% WORLD AND SELECTED COUNTRIES: TRENDS IN PASSENGER AND FREIGHT TRAFFIC, 2015–2020 B) FREIGHT TONNE KILOMETRES (FTK)
1200
25
250
20
200
15
150
10
100
5
50
0
0
2015
2016
2017
2018
2019
2020
FTK by country and for South America (millions)
300
Global RPK (billions)
RPK by country and for South America (millions)
30
9000 1000
8000 7000
800
6000 600
5000 4000
400
3000 2000
200
1000 0
0 2015
2016
G LO B A L
G LO B A L
A M É R I C A D EL SU R
A R G EN TI N A
B R A SIL
C H IL E
C O L O M B IA
A LEM A N IA
10000
2017
A M É R I C A D EL SU R
A R G EN TI N A
2018
B R A SIL
2019
C H IL E
C O L O M B IA
2020
A LEM A N IA
K O R EA
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from the International Civil Aviation Organization (ICAO) Data+, 2020.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
K O R EA
Global FTK (billions)
A) REVENUE PASSENGER KILOMETRES (RPK)
Maritime trade by container has fallen, and freight rates have risen YEAR-ON-YEAR CHANGE IN INTERNATIONAL MARITIME TRADE BY CONTAINER, JANUARY–MAY 2020
(Percentages)
MARITIME CONTAINER SHIPPING RATES, GLOBAL AVERAGE (Dollars per 40-foot container) 2100 2000 1900 1800 1700 1600 1500 1400 1300
Seasonal price decline
1200 1100 09-Jan
09-Feb
09-Mar
09-Apr 2020
09-May 2019
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from Container Trades Statistics (CTS) and Drewry, 2020. The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
09-Jun
Activity has declined at most ports LATIN AMERICA AND THE CARIBBEAN (SELECTED PORTS): CONTAINER PORT ACTIVITY JANUARY–MAY 2020 COMPARED TO THE YEAR-EARLIER PERIOD
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from port authorities and operators.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
The closure of productive activities and health controls have slowed land transport LATIN AMERICA (SELECTED COUNTRIES): YEAR-ON-YEAR CHANGE IN THE VOLUME OF GOODS TRANSPORTED BY TRUCK (Percentages) (a) YEAR-ON-YEAR CHANGE, MARCH–MAY 2020
(b) YEAR-ON-YEAR CHANGE, 25 FEBRUARY–28 JUNE 2020
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the Secretariat for Central American Economic Integration (SIECA) and trucking associations. a Number of land transit declarations per country of origin in the Central American Single Declaration (DUCA) system. The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Projections for 2020
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bรกrcena
In 2020, goods exports are set to fall in value by 23%, the largest drop in 80 years LATIN AMERICA AND THE CARIBBEAN: CHANGE IN GOODS EXPORTS BY VALUE, VOLUME AND PRICE, 1930–2019 AND PROJECTION FOR 2020
(Percentages)
Price (-11%) and volume (-12%)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information on the countries’ balance of payments (1980-2019), and ECLAC series for exports at current prices and price indices (1930–1979).
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
The value of goods imports is on course to fall 25% in 2020, the largest decline in 40 years LATIN AMERICA AND THE CARIBBEAN: CHANGE IN GOODS IMPORTS BY VALUE, VOLUME AND PRICE, 1930–2019 AND PROJECTION FOR 2020 (Percentages)
Price (-7%) and volume (-18%)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information on the countries’ balance of payments (1980-2019), and ECLAC series for exports at current prices and price indices (1930–1979).
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Reprimarization: exports to Asia are projected to fall less than the average LATIN AMERICA AND THE CARIBBEAN: PROJECTED CHANGE IN THE VALUE OF TRADE IN GOODS BY TRADING PARTNER, 2020 (Percentages) EXPORTS IMPORTS
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Only agricultural and livestock exports are projected to increase in 2020 LATIN AMERICA AND THE CARIBBEAN: PROJECTED CHANGE IN THE VALUE OF TRADE IN GOODS BY SECTOR, 2020
(Percentages) EXPORTS
IMPORTS
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the countries’ central banks, customs services and institutes of statistics.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
The trade surplus is expected to increase owing to the plunge in imports, investment and economic activity LATIN AMERICA AND THE CARIBBEAN (SELECTED GROUPINGS AND COUNTRIES): GOODS TRADE BALANCE, 2019 AND PROJECTIONS FOR 2020
(Billions of dollars)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information for 2019 and foreign trade projections for 2020.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bรกrcena
United States-Mexico-Canada Agreement (USMCA) strengthens North American manufacturing and fosters the reshoring of United States companies Elements of continuity with respect to the North American Free Trade Agreement (NAFTA)…
§ Maintains trilateral nature and general structure of NAFTA § Does not reverse tariff liberalization § Deepens the traditional stance of the United States in terms of intellectual property, digital trade and Stateowned companies
…but also significant changes
§ Sunset clause (16 years) § Automotive sector: increase in the percentage of content required from the United States (40-45%) § Parties cannot sign trade agreements with non-market countries (e.g. China) § Investor-State dispute settlement mechanism: eliminated between the United States and Canada and reduced between the United States and Mexico
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
In the post-pandemic era, production and trade are likely to become more regionalized o Reinforcement of two trends that were already taking shape: • Less interdependence in production, trade and technology between the United States and Europe, on one hand, and between the United States and China, on the other. • Trade that is less open, more influenced by geopolitical and national security considerations, with more frequent disputes and a weakened World Trade Organization (WTO). o Outcome: a more regionalized world economy. o Greater pressure for more autonomy in production: reshoring, nearshoring. o Several mega deals are moving in this direction: • USMCA in North America, the Regional Comprehensive Economic Partnership (RCEP) in the Asia-Pacific region and the Agreement Establishing the African Continental Free Trade Area (AfCFTA) o By contrast, regional integration in Latin America and the Caribbean remains fragmented and the weight of intraregional trade has decreased from 21% in 2008 to less than 13% in 2020. The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Our proposals
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bรกrcena
Reduce business costs and promote more efficient, smooth and secure logistics Review regulations and investment patterns to adapt them to a post-COVID-19 world and boost job creation: 1. Redesign investment strategies to promote resilient, efficient and sustainable works that foster connectivity and climate change adaptation and mitigation. 2. Promote the interoperability of services through regulations and the innovative use of combined means of transport that are more efficient and with fewer negative externalities. 3. Strengthen regional integration with trade facilitation actions and coordinated investments that promote employment and productive transformation. 4. Foster logistics intelligence by using ITCs to improve decision-making and to facilitate a more expeditious, competitive, secure and sustainable business flow.
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bรกrcena
The region is moving in the opposite direction to the rest of the world • Loss of industrial capacities, owing to the severe contraction in: • manufactures exports • imports of capital goods and intermediate inputs. • The collapse in intraregional trade has hit manufactures exports and SMEs particularly hard • Productive capacities are being lost that are difficult to recover • The result: the reprimarization of exports is intensified, with fewer jobs, worse environmental degradation and greater inequality
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bárcena
Faced with an uncertain and more regionalized global economy, regional integration must be deepened Opportunities to strengthen regional integration
Immediate consequences Global value chains disrupted by closures of major factories
COVID-19 outbreak
Promote regional value chains in strategic sectors to take advantage of the scale offered by a market of 650 million people
Increase in telework, automation and e-commerce
Borders closed and transport restricted
Restrictions on exports of medical supplies and equipment, and food
The effects of the coronavirus disease (COVID-19) pandemic on international trade and logistics Alicia Bรกrcena
Pursue paperless trade and a common digital market
Reduce regional vulnerability to external shocks
Establish a more equal dialogue with the United States, Europe and China
