August 7, 2020

Nicaragua increased its exports by 14 percent between January and May 2020, leading the region's growth, according to the latest international trade report from the Economic Commission for Latin America and the Caribbean (ECLAC). At the regional level, trade in goods fell 17 percent in this period.

In the region, only four countries, all Central American, increased their exports in the period: Nicaragua (14%), Guatemala (3%), Costa Rica (2%) and Honduras (2%). According to the report, Nicaragua benefited from the rise in the price of gold and the export volumes of agricultural and livestock products (coffee, sugar cane, beans, tobacco, among others). Costa Rica benefited from the increased demand for medical devices to face the pandemic, especially in the United States. For their part, Guatemala and Honduras increased their exports of personal protective equipment, especially masks, and agricultural products.

Part of the economic resilience of these countries could be explained by the importance of exchanges within the subregion itself, which contribute to dampening the lower demand in their extra-regional partners. Central America exhibits the highest intraregional trade coefficient in Latin America and the Caribbean, which in 2018 reached 29.8% (CEIE, 2019).

Imports, meanwhile, fell in all countries in the same period (-17.1% in regional average value), due to the deep recession the region is going through. Of concern is the contraction in imports of capital goods and intermediate inputs (-14.5% and -13.6%, respectively), which will affect the investment rate and compromise the recovery, the report warns.

ECLAC warns that Latin American trade will fall by 23 percent throughout 2020 and that it will be crucial to deepen regional integration in such an uncertain economic context. This requires promoting regional value chains in strategic sectors, taking advantage of the scale offered by a market of 650 million inhabitants, promoting the agenda of "paperless trade" and a digital common market, reducing the region's vulnerability to external shocks, and generate a more symmetrical dialogue with the United States, China and Europe.