2023/Q1 Article 13. Latin America and the Caribbean: trade relations in the face of global geopolitical fragmentation risks

Series: Economic Bulletin.

Author: Rodolfo Campos and Jacopo Timini.

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2023/Q1 Article 13. Latin America and the Caribbean: trade relations in the face of global geopolitical fragmentation risks (444 KB)

Abstract

Rationale

A geopolitical fragmentation of world trade, i.e. the emergence of two blocs that restrict trade with countries in the other bloc, has recently become a more likely prospect. How does this geopolitical risk affect the trade and economic outlook for Latin America and the Caribbean?

Takeaways

• Countries in Latin America and the Caribbean differ in terms of both their trade openness and the geographical structure of their trade.

• They are therefore heterogeneously exposed to the risk of geopolitically fragmented trade.

• We quantify each country’s exposure and analyse how Latin America can harness greater trade integration with the European Union to reduce the costs of a potential fragmentation of world trade.