Adverse global conditions leave the region lagging further behind - PowerPoint PPT Presentation

Adverse global conditions leave the region lagging further behind

Key messages ▪ Global and regional trade are shrinking and trade tensions are mounting, widening the region’s structural gaps ▪ Trade can contribute to environmental sustainability and reduce climate change ▪ Regional infrastructure and logistics are crucial to trade, production and integration

Chapter I Global and regional trade are shrinking and trade tensions are mounting, widening the region’s infrastructure gap

Since 2012, world trade has grown by less than half the rate of the previous decade World: real variation in merchandise exports and GDP, 1990-2018 (Percentages) Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Trade Organization (WTO), World Trade Statistical Review 2019 , Geneva, 2019. Note: The averages of the first and second decades of this century exclude the years of crisis (2009) and recovery (2010 and 2011).

The slowdown has worsened owing to the build-up of trade barriers Year-on-year change in the volume of global Coverage of import restriction measures, merchandise trade, January 2012 – July 2019 October 2012 – December 2019 (Percentages) (Trillions of dollars) 1200 1,029 1000 728 800 600 588 400 214 301 228 340 201 200 101 79 0 Oct 2012- Oct 2013- Oct 2014- Oct 2015- Oct 2016- Oct 2017- Oct 2018- May 2019- oct 2013 oct 2014 oct 2015 oct 2016 oct 2017 oct 2018 may 2019 dic. 2019 a Monto nuevas medidas Restricciones acumuladas desde octubre de 2017 Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Trade Organization (WTO), Report of the TPRB from the Director- General on Trade-Related Developments (mid-October 2018 to mid-May 2019) , Source : Economic Commission for Latin America and the Caribbean (WT/TPR/OV/W/13), Geneva, 2019, and ECLAC estimates for the period 16 May to 31 (ECLAC), on the basis of Netherlands Bureau of Economic Policy Analysis December 2019. (CPB), World Trade Monitor [online database] a This estimation considers only measures implemented and those officially https://www.cpb.nl/en/worldtrademonitor. announced up to 1 September 2019.

The dissatisfaction of the United States with WTO is one of the main causes of trade tensions ▪ The main points of criticism are: o WTO has failed to persuade China to change its economic model o Some high-income countries have declared themselves developing countries o The WTO Appellate Body oversteps its mandate ▪ The current administration has taken unprecedented measures: o Unilateral tariff increases in defiance of WTO rules o Proposal of a graduation mechanism for “advanced” developing economies o Blocking the selection of new Appellate Body members ▪ Calls for WTO reform have proliferated, but there is great uncertainty about the possibility of the Appellate Body ceasing to function in December 2019

The economies of the United States and China are decoupling in terms of trade and technology United States and China: change in the value of merchandise trade with the world and selected trading partners, first half of 2019 relative to the same period in 2018 (Percentages) China United States 10 10 7 6 6 5 3 3 5 5 0 0 0 0 0 -1 -5 -5 -3 -5 -10 -10 -8 -15 -15 -12 -20 -20 -19 -25 -25 -30 -30 -28 -35 -35 China Unión América Mundo Estados Unión América Mundo Europea Latina y el Unidos Europea Latina y el Caribe Caribe Exportaciones Importaciones Exportaciones Importaciones Source : Economic Commission for Latin America and the Caribbean (ECLAC), Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the on the basis of data from the International Trade Centre (ITC) basis of data from the United States International Trade Commission (USITC)

United States reduces its trade deficit with China by 10%, but its trade deficit with other partners increases United States: trade balance with the rest of the world and selected partners, first half of 2018 and of 2019 (Billions of dollars) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from the United States International Trade Commission (USITC). .

Trade tensions spread through value chains to the “factories” of Asia and Europe Selected countries and groupings: change in volume of merchandise trade, January – June 2019 relative to the same period in 2018 (Percentages) Exports Imports 8 8 5.5 6 6 3.0 4 4 2.6 7.1 6.9 2.2 1.8 2.0 2 2 0.8 1.1 0.5 0 0 -1.9 -0.5 -2 -2 -2.4 -2.6 -2.7 -2.7 -2.6 -4 -4 -8.9 -6 -6 - … -8 -8 -10 -10 Alemania Francia Italia Países Bajos Reino Unido ASEAN China India Japón Rep. de Corea Alemania Francia Italia Países Bajos Reino Unido ASEAN China India Japón Rep. de Corea Factory Europe Factory Europe Factory Asia Factory Asia Source : Economic Commission for Latin America and the Caribbean, on the basis of data from World Trade Organization (WTO) and Eurostat.

Trade tensions hit the industrial production of major economies World and selected countries and groupings: year-on-year change in the volume of trade and industrial production, 2012 – 2019 (Percentages) A. World trade and industrial production B. Industrial production 6 12 5 10 4 8 3 6 2 4 1 2 0 0 -1 -2 -2 -4 -3 -6 2012m01 2012m07 2013m01 2013m07 2014m01 2014m07 2015m01 2015m07 2016m01 2016m07 2017m01 2017m07 2018m01 2018m07 2019m01 -8 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 2017Q3 2018Q1 2018Q3 2019Q1 Comercio Producción industrial Estados Unidos Japón Zona del euro China Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Netherlands Bureau of Economic Policy Analysis (CPB), World Trade Monitor [online database] https://www.cpb.nl/en/worldtrademonitor and Organization for Economic Cooperation and Development (OECD), OECD Main Economic Indicators [online database] https://www.oecd.org/sdd/oecdmaineconomicindicatorsmei.htm

Several factors are weakening trade in the post-crisis period ▪ Slowdown in global GDP growth and particularly in investment ▪ China’s decreasing dependence on trade ▪ Gradual decoupling of the economies of the United States and China ▪ Weaker momentum in FDI ▪ Curtailing of global value chains ▪ Digitization and other technological changes

Weak investment in the advanced countries has hit trade especially hard Investment as a percentage of GDP, 1990 – 2017 35 33 31 29 27 25 23 21 19 17 15 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Mundo Países avanzados Países en desarrollo Source: ECLAC, on the basis of data from the European Central Bank and the International Monetary Fund.

FDI growth was subdued in the post-crisis period, weakening trade within global value chains World, advanced and developing economies: foreign direct investment inflows, 2007 – 2018 (Percentages of the GDP of each group) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Mundo Economías avanzadas Economías en desarrollo Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from the United Nations Conference on Trade and Development (UNCTAD) and International Monetary Fund (IMF), World Economic Outlook Database, for global GDP.

The expansion of global value chains has been curtailed High-, upper-middle- and lower-middle-income countries: downstream and upstream participation in global value chains, 2000, 2007 and 2017 (Percentages) Forward linkages Backward linkages (Percentage of GDP) (Percentage of goods production) 16 16 2000 2007 2017 2000 2007 2017 14 14 12 12 10 10 8 8 6 6 4 4 2 2 0 0 Alto Medio alto Medio bajo Alto Medio alto Medio bajo Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Trade Organization (WTO) and others, Global Value Chain Development Report 2019: technological innovation, supply chain trade, and workers in a globalized world , Geneva, 2019

Trade is becoming less material: services and digital products are growing faster than physical goods World trade in goods, traditional and modern services, and cross-border data flows, 2005 – 2018 (Index 2010 = 100) 260 1600 240 1400 220 1200 200 1000 180 160 800 140 600 120 400 100 200 80 60 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Bienes Servicios modernos Servicios tradicionales Servicios TIC Regalías y otros derechos de licencia Flujos de datos transfronterizos (eje derecho) Source: Economic Commission for Latin America and the Caribbean (ECLAC) on the basis of World Trade Organization (WTO) Statistics Database [online] http://stat.wto.org/Home/WSDBHome.aspx?Language=E, and McKinsey Global Institute, Globalization in Transition: The Future of Trade and Value Chains , Washington, D.C., 2019.

After two years of recovery, regional trade is faltering again