The sharp fall in demand in the region is expected to lead to a collapse in intraregional trade in all areas, with double-digit percentage declines in almost all cases (see table 15). This situation will mainly affect manufacture exports, whose main market for almost all countries is the region itself. Table 15 | Latin America and the Caribbean: structure of intraregional trade, average intraregional trade ratio as measured by exports, 2018–2019 and projected variation in 2020a (Billions of dollars and percentages)
Sector Agriculture, hunting, and fishing
Intraregional exports
Share
Intraregional trade ratio
Projected variation in 2020
13.521
8
10
-2
25.998
16
19
-15
19.139
12
18
-14
Wood, pulp, and paper
5.784
4
20
-12
Textiles, apparel, and footwear
6.804
4
22
-18
Chemicals and petrochemicals
16.505
10
41
-24
Medicines
3.282
2
59
-10
Rubber and plastic
4.643
3
35
-24 -23
Oil and mining Food, beverages, and tobacco
Non-metallic minerals
2.408
1
33
Metals and related products
14.383
9
9
-27
Machinery and equipment
16.829
10
8
-24
Automotive
23.418
14
16
-45
Other manufactures
11.820
7
13
-33
164.535
100
15
-28
Total
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from UN Comtrade - International Trade Statistics Database. a Excludes information on the maquila industry in Central America.
The expected trend in regional foreign trade in 2020 suggests there will be a loss of productive capacity in the industrial sector, linked to the sharp contraction in exports of manufactures and in imports of capital goods and intermediate inputs. This will make it more difficult to move towards a more knowledge-intensive export specialization as the region emerges from the crisis.
F. A more uncertain and regionalized world economy makes further regional integration imperative The pandemic is likely to reinforce two interrelated trends that were already taking shape. The first is a shift towards less interdependence in production, trade and technology among the world’s major economies, particularly between the United States and Europe on the one hand, and China on the other. The second is a trend towards world trade that is less open, more influenced by geopolitical and national security considerations, with more frequent disputes and with a weakened multilateral framework. The net result will not be the reversal of globalization, but a more regionalized world economy, organized around three major productive hubs: North America, Europe, and East and South-East Asia. In a global context of increased production regionalization, regional integration must play a key role in the crisis-recovery strategies in Latin America and the Caribbean. Establishing an integrated market of 650 million people would provide the countries of the region with significant protection against external supply or demand shocks. It would also help achieve the scale required to strengthen strategic industries such as pharmaceuticals and medical supplies, and to foster shared production and research networks among countries and subregions. This would reduce the region’s vulnerability to supply disruptions such as those seen during the pandemic (ECLAC, 2020c). Meanwhile, in a context of weakening multilateralism, greater regional coordination is vital to foster a more equal dialogue with the main actors in the global economy (see diagram 1).
20
