Colombia’s international trade is among the worst hit by the COVID-19 pandemic in the region, but the government appears to be ignoring international economists on how to recover.
In its later report on the economic impact of the global crisis, the UN’s regional economic think tank ECLAC said Colombia’s exports dropped 25% between January and May compared to the same period last year, performing better only to Cuba and Venezuela.
Imports dropped 18% compared to the first five months of last year, which put the country among the better performers, affecting domestic production.
Latin America failing to integrate
The ECLAC urged to anticipate less trade with traditional trading partners like the United States, the European Union and China.
The UN’s economic commission warned governments to expect more protectionist policies, which would result in a slow recovery of global trade and an increase in regional trade.
The ECLAC decried the inability of Latin America to effectively promote regional economic integration that could make up for individual countries’ sharply dropped exports to outside the region.
The region — which has seen major ideological polarization for example between Venezuela and Colombia — is going the opposite way than the rest of the world where concrete plans have been developed for regional integration.
This regional standstill is causing the loss of its industrial capacities as factories are forced to close and extraordinarily hard impacts are affecting manufacturing and small and medium-sized businesses.
This is causing the region to lose its productive capacities that are “difficult to recover,” according to the ECLAC.
Consequently, the region will see worsening conditions for exports with fewer jobs, greater environmental degradation and increased inequality.
ECLAC’s tips for regional economic integration
- To redesign the investment strategy favoring resilient, efficient and sustainable works that promote connectivity and adaptation and mitigation to climate change.
- Promote the interoperability of services through regulations and innovations for the use of combined, more efficient means of transport, and with less negative external factors.
- Strengthen regional integration with trade facilitation actions and coordinated investments that favor employment and productive transformation.
- Promote logistical intelligence through the use of ICT to improve decision-making and encourage faster, more competitive, secure and sustainable trade flows.
Colombia’s fixation on pleasing crony capitalists
Colombia’s Vice-President Marta Lucia Ramirez said she will continue to follow the lead of the country’s controversial business association and showed interest in prioritizing exports to markets like the US and Europe, who the ECLAC warned are closing their doors.
The VP did say she would hope to increase trade member nations of the Pacific Alliance and with newly founded regional organization Prosur that consists of conservative governments in the region.
Additionally, she said she hoped to promote so-called “buy local” initiatives.
Agriculture only sector doing well
Regionally, the ECLAC said that only the agro-industrial sector saw a slight improvement of 4% compared to the first five months of last year, mainly due trade within the region.
The Pacific port city of Buenaventura saw a staggering 33% drop compared to the same period last year, making the impoverished city the most severely hit in the entire Pacific region.
Colombia’s road transport of cargo was the least affected by the reduced trade, registering only a 29% drop between January and May compared to the first five months of last year.
According the ECLAC, only the exports of agricultural products have a chance of recovering this year. While oil and mining exports are expected to contract as much s 33%, agriculture exports could see an increase of 2%.