Panama Exports Decline

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By LatAm Reports Editor

The value of exports of goods in Panama is contracted, according to the IDB

Falling prices and lower volume growth explained the contraction of export sales of goods.

The value of exports of goods in Panama fell 8.0% year-on-year in the first half of 2023, after 2.0% achieved in 2022 and 111.3% obtained in 2021, according to a new report from the Inter-American Development Bank (IDB).

During this period, the value of El Salvador’s exports of goods also deteriorated -7.2%, Guatemala -7.7%, Honduras -2.2%, Nicaragua -2.0% and the Dominican Republic -1.3%, the latest annual report for Trade and Integration of the IDB.

Data from Honduras and Panama do not include exports via REC (special trade regimes), the report clarifies. In Central America, the only country that had a favorable performance was Costa Rica.

Behaviour in Latin America and the Caribbean

Overall, the value of exports of goods from Latin America and the Caribbean, which had expanded 28.0% in 2021, slowed to 17.0% in 2022 and fell 2.7 per cent year-on-year in the first half of 2023, according to the report.

In the first half of 2023, the volume of shipments in Latin America and the Caribbean increased mainly driven by Brazil and Mexico.

The deterioration is the result of the fall in prices (4.7%) and the lower growth of the quantities exported compared to the previous year (2.9%). The quantities exported, for their part, increased by 2.9 per cent.

The Trade and Integration Monitor 2023 analyzes the evolution of Latin America and the Caribbean in the new global context, comparing the region with the rest of the world and examines country-wide trade performance and major integration schemes.

During the same period, world trade rose from an expansion of 11.9% to a fall of 5.0% year-on-year. However, projections for the rest of the year confirm the consolidation of the contractive trend in external sales.

According to the report, the deterioration of the global trading environment is due to a series of shocks, including geopolitical conflicts, tightening monetary policies, the increased frequency of adverse weather events and the slowdown in global economic growth.

Exports of services from the region

On the other hand, the study also reveals that the region’s services exports experienced a slight slowdown in the first quarter of 2023, reaching 27.8% compared to 37.7% in 2022. However, they continued to grow at a faster rate than the global average, which was 1.3 per cent.

After the post-pandemia recovery, exports from the region weakened faster than expected. However, opportunities also appear in this new scenario, said Paolo Giordano, chief economist of the IDB’s Integration and Trade Sector and coordinator of the report.

In particular, Giordano said, “with policies aimed at relaunching the competitiveness of the agricultural sector, the region has the potential to boost exports and contribute to global food security.”

In conclusion, it is noted that the region faces a challenging external scenario for less demand dynamism, greater geopolitical fragmentation, more active industrial policies of global competitors and new regulatory demands dictated by the climate agenda.

However, countries have the opportunity to expand the exportable supply of agricultural products and contribute to global food security.

But, in order to harness this potential, hand in hand with the private sector, governments will have to relaunch productivity and regain competitiveness with integrated public policies that respond to a multiplicity of objectives and help to simultaneously overcome the expansion of production and the reduction of its impact on the environment and climate change, he concludes.

Export price

In the first half of 2023, export prices in the region fell 4.7 per cent year-on-year, after an increase of 8.8 per cent in 2022. The drop in exports of goods was widespread in all destinations, according to the report.

However, the reduction in intraregional sales (0.6%) was lower than that of extraregional sales (-2.2%) and the share of intraregional trade increased to 15.2%.

This article has been translated from the original which first appeared in La Estrella De Panama