Guyana records -4% export growth rate for 2015 – IDB

In light of a contraction in sales to the United States and Canada, Guyana suffered a restrained decline in exports of negative four per cent in 2015, according to recently released Inter-American Development Bank (IBD) report.

The report highlighted that for the six Caribbean countries for which 2015 export data were available, estimates showed an aggregate decline of 23 per cent, or nine percent when Trinidad and Tobago is excluded. While the most pronounced contraction was observed in this latter country (-27 per cent), followed by Suriname (-14 per cent), Belize (-13 per cent), Jamaica (negative seven per cent), Barbados (negative five per cent), and Guyana (negative four per cent).

The principal markets of the Caribbean – the United States (US), the European Union (EU), and the sub-region itself – all showed negative performances. The report revealed too that Guyana’s decline was attenuated by higher shipments to Panama, to Caribbean partners, and to the EU. Guyana’s export growth rate for shipment to the US declined by negative six per cent in 2015.

Meanwhile, reduction in exports from Barbados (negative five per cent) responded mainly to the decline in intra-regional shipments, which offset the increases in sales to the US and to the EU. The European Union and Mexico are the partners that most contributed to the decline in the exports of Belize (-13 per cent).

All principal trading partners contributed to the seven per cent decline in Jamaica’s exports in 2015. The most relevant, due to their weight in the total, were with the US, the EU, and the Caribbean sub-region.

The estimated reduction in exports from Suriname (-14 per cent) was due to lower purchases from the United States. On the other hand, the collapse in oil prices severely affected the exports of Trinidad and Tobago (-27 per cent), with the US and intra-regional partners being the destinations that mostly contributed to the contraction.

According to the report, in 2015 Latin American and Caribbean exports experienced their greatest decline since the international financial crisis, with an estimated reduction of 14 per cent. Although to a large degree, this rate reflected the impact of the sharp contraction in the prices of the commodities that make up the regional export basket, the report stated that weak performance of manufactured goods was also a factor.

“There was an almost immediate impact of the extra-regional decline on the levels of intra-regional trade, evidence of the strong linkage of the economic cycle of Latin American and Caribbean countries with the performance of the external sector. Only in the case of the Mesoamerican countries is the sub-region functioning as a countercyclical outlet for exports,” the report read, adding that for 2016, the risks for Latin American and Caribbean export growth are tilted to the downside.

It noted that there are no signs of a reversal of the downward trend in commodity prices, which are approaching the levels seen at the beginning of the export boom in the early 2000s. Additionally, the modest growth of the United States and of the European Union are now combining with the deceleration of the Chinese economy and with the erosion of intra-regional demand to lower overall real export demand. Finally, the divergence in monetary policies in the United States and the Euro zone make a sustained appreciation of the dollar more likely, which could accentuate deflationary pressures on regional trade.

Therefore, the IDB stated that given the current environment, it is urgent to implement trade promotion and facilitation policies that contribute to reverse the downward trend and to support trade diversification.

So far, estimates for 2015 indicate that the merchandise exports of Latin America and the Caribbean will show a contraction of 14 per cent.

“This would mean the largest drop since the international financial crisis, and a result that will take the total value of exports close to US$915 billion, barely above the 2010 level,” it said, noting that foreign sales will fall for the third consecutive year.

Unlike previous years, when performance was varied across sub-regional groups, in 2015 the contraction was estimated to affect nearly all countries.