Optimism is rising among exporting firms in the Caribbean and Latin America with one in every two firms expecting global demand will increase in the next three months, according to an Inter-American Development Bank (IDB) survey.
This is a drastic improvement from the 16 per cent of firms that this view when surveyed in 2020, said the survey.
What is more, the research found that some 35 per cent of companies increased their exports in the first quarter of this year, compared to just 11 per cent in 2020.
But with growth still below pre-COVID-19 pandemic levels, IDB President Mauricio Claver-Carone is calling for deeper intra-regional integration.
“Overcoming the crisis and getting growth above pre-pandemic levels is one of the main challenges facing Latin America and the Caribbean. To achieve this, we need to facilitate investment in both regional and global value chains and increase intra-regional integration,” said Claver-Carone.
About seven out of every ten companies said that the region needs to sign more trade agreements, especially with Latin American and Caribbean countries and with the United States, said the IDB survey.
The survey said companies predict foreign demand to increase by 57 per cent over the coming year, up from 36 per cent in 2020 – another sign of optimism in the exporting sector a year and a half after the COVID-19 outbreak.
Seven out of ten firms also acknowledged that adopting environmentally friendly measures can facilitate their insertion into global value chains.
Addressing climate change and strengthening regional value chains are two of the five priorities of Vision 2025, the IDB’s plan to support sustainable recovery and social and economic development in the region.
“It’s encouraging to see that in the second year of the pandemic, companies recovered their export performance and anticipate significant trade improvements in 2022. It’s also worth noting that government assistance to cope with the negative effects of the pandemic has increased, according to the firms,” said Fabrizio Opertti, manager of the IDB’s Integration and Trade Sector.
In its second edition, the survey was conducted by the Integration and Trade Sector’s Institute for the Integration of Latin America and the Caribbean (INTAL) among 405 micro, small, medium, and large enterprises from 18 countries in the region.
The research revealed that some 80 per cent of firms will increase or maintain their export-oriented investment levels in the next three years.
Only four per cent of firms reported receiving no public-sector assistance to mitigate the pandemic’s impact on export performance, while 96 per cent of companies said they took measures to mitigate the adverse effects of the pandemic on their sales abroad, most of which entailed proactive initiatives such as seeking out new markets.
Not surprisingly, there was also an increase in the number of firms using e-commerce for export during the pandemic. The survey revealed that some 38 per cent of companies were using this sales channel, compared to 25 per cent prior to the pandemic.