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Commodities boost LATAM surpluses in 2021

John W. Miller | Chief Economic Analyst, Trade Data Monitor

Latin America and the Caribbean are expected to record a significant rebound in 2021 overall trade, according to the Economic Commission for Latin America and the Caribbean (ECLAC), and an analysis by Trade Data Monitor, the world’s premier source of trade statistics.

Significantly for balance of payments, big increase in key commodities have driven high trade surplus, and an influx of currency into the region, especially in Brazil.

ECLAC now expects overall exports to increase by 25% in 2021 after falling 10% in 2020, on the back of a 17% rise in export prices and an 8% expansion in the volume of shipments. “The increase in the region’s goods exports in 2021 is due mainly to higher prices for basic products – above all minerals, hydrocarbons and agro-industrial products – more than greater volume,” ECLAC said.

Latam’s recovery is part of a wider rebound around the world. Fears about supply chains crumbling were unfounded. The $8.6 trillion global logistics industry, it turns out, is big enough to get goods from any producer to almost any buyer or consumer on earth. The WTO expects global trade to increase by 10.8% in 2021, and by 4.7% in 2022. According to UNCTAD, total imports and exports of goods were $5.6 trillion in the third quarter of 2021, a new quarterly record. Total trade in goods and services is expected to reach $28 trillion for 2021.

Boosted by massive shipments of soybeans and iron ore, Brazil registered a trade surplus of $58.4 billion over the first ten months of 2021, up from $45.2 billion over the same time period in 2020. Argentina increased its trade surplus to $13.9 billion over the first ten months of 2021, from $12.5 billion over the same time period in 2020, thanks to an increase in cereal exports.

However, things were tougher for countries without big commodity industries. Colombia’s trade deficit increased to $13.1 billion in the first ten months of 2021, from $7.9 billion. In part, that was because its trade deficit with China rose to $7.4 billion from $5.6 billion.

One trend that is sure to benefit Latin America is the boom in electric vehicles, which need batteries, and an industrial supply chain dependent on commodities like lithium, in which Latin America is rich.

Electric car sales are expected to top $800 billion in value by 2027, double their current value. That’s boosted the trade in materials related to making batteries. Chinese exports of lithium batteries increased 78% to $25 billion from $14 billion during the first 11 months of 2021. It’s getting raw materials from Latin America. The world’s top two exporters of the raw material needed to make electric batteries – lithium carbonate – are Chile and Argentina, according to an analysis by TDM. But now the Latin American countries have been changing where they ship the material crucial to manufacturing electric vehicles. Increasingly, they’re sending lithium to China instead of other key markets like Japan, South Korea and the U.S., according to TDM.

*2021: Projection based on current data 


JOHN W. MILLER, Chief Economic Analyst, Trade Data Monitor

Read this article and more in Latin Trade’s March 2022 magazine issue, by clicking here.


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