Latin America-EU - economic indicators, trade and investment
From Statistics Explained
- Data from March 2011, most recent data: Further Eurostat information, Main tables and Database.
This articles analyses economic relations between the European Union (EU and the 17 countries composing Latin America (see Data sources and availability for the list of countries), in terms of international trade and investment.
Since 2002, the EU has recorded a deficit in trade in goods with Latin America. In 2010, the deficit was EUR 5.9 billion, by far its lowest level since 2002. The main products imported from Latin America were metalliferous ores (essentially from Brazil). On the export side, the main products were road vehicles and general industrial machinery and equipment (essentially to Brazil). For trade in services, there was a 12 % decrease between 2008 and 2009, following a 20 % rise a year earlier. The EU continued to run large surpluses with Brazil, Mexico and Venezuela. EU-27 foreign direct investment flows with the Latin American economies fell by 24 % between 2008 and 2009. While there were increases for Mexico and Argentina, this was offset by a decline in Brazil. FDI stocks saw continued growth in 2009.
Main statistical findings
The last two years have seen a substantial reduction in the long-standing trade in goods deficit with Latin America. From a peak of nearly EUR 20 billion in 2008, the deficit had fallen by more than two thirds by 2010. This overall deficit of EUR 5.9 billion in 2010 was the result of a large surplus with Mexico (EUR 8.3 billion) being outweighed by deficits with Costa Rica (EUR 4.8 billion), Chile (EUR 3.4 billion) and Peru (EUR 2.8 billion). The EU also reported a surplus with Panama (EUR 1.7 billion), Venezuela, Guatemala and El Salvador, all three less than EUR 0.4 billion.
Export of goods to Latin America
Together Brazil and Mexico take a share of over 62 %
After the 20 % drop in 2009, exports to Latin America rebounded with a 36 % growth to reach a new high in 2010. Only Panama and El Salvador failed to share this growth. Total EU-27 exports to Latin America reached EUR 84 billion. Brazil (EUR 31 billion) and Mexico (EUR 21 billion) were the main markets. Over the reference period 2003 to 2010, 6 countries (Argentina, Bolivia, Brazil, Paraguay, Peru and Uruguay) recorded average annual growth rates around 15 %. El Salvador and Costa Rica were the only countries to record an average annual drop in total EU-27 exports to Latin America. EU-27 exports to Latin America accounted for over 6 % of the total extra EU-27 exports. Brazil took a share of 2.3 % and Mexico of 1.6 %. In 9 countries the respective share did not reach 0.1 %.
Exports of ‘Machinery and transport equipment regains traction with a vengeance
As Table 1 shows (SITC 2-digit), road vehicles products regained top spot in EU-27 exports to Latin America, followed by general industrial machinery and equipment and medicinal and pharmaceutical products. This is reflected in Table 4 (SITC 1-digit) where category 7, "machinery and transport equipment", which covers both the top two detailed products, was the largest category for all EU-27 exports to all Latin American countries. Category 5 "Chemicals and related products n.e.s." which includes pharmaceuticals was the next largest category. On their own, these two categories of goods accounted for some 70 % of total EU-27 exports to Latin America. The pattern of exports to Mexico in 2010 was interesting with substantial amounts of mineral fuels and manufactured goods classified by material. Indeed, Mexico on its own accounted for over half the EU-27 exports of mineral fuels to Latin America.
Imports of goods from Latin America
Between 2009 and 2010, the value of imports rose much less than that of exports: 27 % versus 36 %
In 2010, imports from Latin America were valued at almost EUR 90 billion, representing a 27 % increase in terms of value compared to 2009. Brazil is by far the EU-27’s largest partner in Latin America although its annual growth rate over the period 2003 to 2010 is below the Latin America average. Its market share fell from 38 % in 2003 to 36 % in 2010. Mexico’s share rose from 13 % in 2003 to 15 % in 2010. Other countries with substantial import totals were Argentina and Chile both with more than a 10 % share of the total EU-27 imports from Latin America. Compared with 2009, Venezuela was the only country that recorded a small drop in the value of goods it exported to EU-27 in 2010. EU-27 imports from Latin America represent over 6 % of total extra EU-27 imports. Brazil accounted for over 2 % followed by Mexico (0.9 %) and Argentina and Chile (both 0.6 %).
Food and live animals products represented about 60 % of EU imports from Argentina
With more than a quarter of the total EU-27 imports from Latin America, "food and live animals" was the largest category in 2010. Brazil and Argentina, accounted together for more than half of all EU-27 imports from Latin America in this category. It is also the main category for six countries in total. However, unlike Brazil, with a broad spread of product categories, Argentina is critically dependent on this single category for the majority of its exports to the EU-27. The second largest import product category was "crude materials, inedible, except fuels", including iron ores. Here, Brazil, with its reserves of iron ore, dominated this category, accounting for more than half of the total. Other major partners were Chile and Peru. "Machinery and transport equipment" was the next largest category, where Mexico, Costa Rica and Brazil accounted for over 90 % of the total in this category. Indeed for Mexico, Costa Rica and Panama this was their largest contribution to imports. "Mineral fuels, lubricants and related mat." was another important category, shared relatively evenly between Venezuela, Mexico, Colombia and Brazil. While Venezuela’s earlier dominance of this category has diminished as its oil production has fallen, it remains very dependent on this single category for imports into the EU-27. One more category to mention is "manufactured goods classified chiefly by material". Chile is the leading player in this market where its copper and other metal production is converted into semi-manufactures before export (see Data sources and availability). With Brazil, these two countries accounted for around three quarters of the total EU-imports from Latin America in this category.
Transportation services, both rendered and obtained, dominate only in Chile
Table 6 shows the 2009 data for selected Latin American countries. At the total level, the EU-27 recorded a positive trade balance with all the countries shown, amounting to EUR 2 764 million for Brazil, EUR 1 955 million for Venezuela and EUR 1 490 million for Mexico. For the “Transportation” category, the EU-27 again recorded a surplus for all countries. The surplus for Brazil was again the largest shown at EUR 789 million. Chile, a distant market with high transportation costs, had the second largest surplus at EUR 432 million followed by Venezuela with EUR 412 million. The “Travel” category was a different story. Here the importance of the tourism market leads to deficits with Mexico, Argentina, Chile and, to a very minor extent, with Uruguay. For the same category, a trade surplus was registered with Brazil and Venezuela. The “Other services” category (see Data sources and availability for a detailed description) is the most significant for EU-27 exports, in all countries except for Chile, where it is outweighed by high transportation exports. Within this broad group, the detail of which is not shown, the main components “Other business services”, “Royalties and licence fees”, "Computer and services" and "Insurance services" earn a very healthy surplus for the EU-27 with most partners. “Other business services” is the main component for all partners both for exports and imports and is substantial for Uruguay (83 %). For Brazil and Venezuela, there is a large surplus for the EU-27 for "Construction". “Computer and information services” is Mexico’s main credit item, realising a substantial EU-27 surplus. Brazil, the largest Latin American market, accounted for 10 % of EU-27 trade in services with Latin America (data not shown).
Foreign direct investment flows (FDI)
Brazil the most popular destination
In 2009, EUR 19 billion was invested in Latin America, a decrease of 23 % compared with 2008 (the worldwide decrease in extra-EU outflows was 28 %) and corresponded to 6.9 % of total extra-EU outflows. As Table 8 outlines, within Latin America, Brazil continues to attract the bulk of FDI outflows, amounting to EUR 7 587 million, or 40 % of the total for Latin America, but 10 % down compared with 2008. Investments in Argentina, which has replaced Mexico in second place, amounted to EUR 6 259 million, while that for Mexico totalled EUR 3 818 million, a fall of nearly 30 %. These three countries accounted for over 90 % of total Latin America investment outflows, Venezuela (EUR -1 337 million) and Uruguay (EUR -253 million) both suffered disinvestment in 2009. The figures for direct investment inflows from Latin America to the EU-27 are very volatile. In 2009, Mexico was the largest investor at EUR 2 857 million, nearly 70 % of total Latin American inflows. For Chile, there was a disinvestment of EUR 967 million. Brazil, which had been by far and away the largest source of investment in both 2007 and 2008, contributed relatively little in 2009.
2009 saw a 17 % rise in FDI stocks held in Latin America. As Table 9 shows, the rise was shared among all countries, for which data are available, except Venezuela. EU-27 inward FDI stocks held by most Latin American countries rose between 2008 and 2009. Chile was an exception with its inward FDI stocks falling about -27 %.
Data sources and availability
This publication focuses on the majority of the countries making up Central and South America, often referred to as ‘Latin America’. These countries are:
- Bolivia (Andean region)
- Colombia (Andean region)
- Ecuador (Andean region)
- Peru (Andean region)
- Costa Rica (Central America region)
- El Salvador (Central America region)
- Guatemala (Central America region)
- Honduras (Central America region)
- Nicaragua (Central America region)
- Panama (Central America region)
- Argentina (Mercosur)
- Brazil (Mercosur)
- Paraguay (Mercosur)
The countries Belize, Guyana and Suriname –excluded when handling a stricter definition of ‘Latin America’– are not considered. Data for these three countries, all Members of CARICOM (the Caribbean Community promoting economic integration and cooperation), will be dealt with in a forthcoming ‘Statistics in Focus' on ACP countries.
Latin America aggregate:
In the section on the trade in services figures referring to Latin America as a whole include Cuba.
The contents of this article are based on data available at Eurostat.
Data on the trade of goods are available in Eurostat’s Comext database.In the methodology applied for the statistics on the trading of goods, extra-EU trade (trade between Member States and non-member countries) statistics do not record exchanges involving goods in transit, placed in a customs warehouse or given temporary admission (for trade fairs, temporary exhibitions, tests, etc.). This is known as "special trade". So the partner will be the country of final destination of the goods.
Data on the trade of services are based on balance of payments statistics. The balance of payments records all economic transactions between a country (i.e. its residents) and foreign countries or international organisations (i.e. the non-residents of that country) during a given period. As part of the balance of payments, the current account records real resources and is subdivided into four basic components: goods, services, income and current transfers. The methodological framework used is that of the fifth edition of the International Monetary Fund Balance of Payments Manual (BPM5). The EU balance of payments is compiled by Eurostat in accordance with a methodology agreed with the European Central Bank (ECB).
Category "Other services" includes “Merchanting”, “Architectural, engineering and other technical consultancy”, “Services between affiliated enterprises”, “Communication”, “Construction”, “Insurance”, “Financial”, “Computer services” and “Royalties and licence fees”.
Data of Foreign Direct Investment (FDI) is based on the methodological framework of the OECD: Benchmark Definition of Foreign Direct Investment Third Edition, a detailed operational definition fully consistent with the IMF Balance of Payments Manual, Fifth Edition, BPM5. Foreign Direct Investment (FDI) is the category of international investment made by an entity resident in one economy (direct investor) to acquire a lasting interest in an enterprise operating in another economy (direct investment enterprise). The lasting interest is deemed to exist if the direct investor acquires at least 10 % of the voting power of the direct investment enterprise. Through outward FDI flows, an investor country builds up FDI assets abroad (outward FDI stocks). Correspondingly, inward FDI flows cumulate into liabilities towards foreign investors (inward FDI stocks). However changes in FDI stocks differ from FDI flows because of the impact of revaluation (changes in prices and, for outward stocks, exchange rates) and other adjustments such as catastrophic losses, cancellation of loans, reclassification of existing assets or liabilities. FDI flows are components of the financial account of the Balance of Payments, while FDI assets and liabilities are components of the International Investment Position.
Standard international trade classification (SITC) (Tables 1, 4 and 5). Information on commodities exported and imported is presented according to the SITC classification (Standard International Trade Classification) at a more general level (1-digit – Tables 4 and 5) and a more detailed level (2-digits – Table 1). A full description is available through Eurostat’s classification server RAMON.
COMEXT data (trade of goods)
Please note that the sums of the individual SITC product categories, as shown in Table 4 and Table 5 are less than the totals as displayed in Tables 2 and 3 respectively, due to confidentiality reasons. Concerning the impact of Chile is the leading player in this market where its copper and other metal production is converted into semi-manufactures before export (see www.copper.org - Copper Production from Ore to Finished Product).
In this publication: 1 billion = 1000 million
This article presents data on the trade of goods, the trade of services and the foreign direct investment (FDI) reported by the EU with Latin American countries.
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Further Eurostat information
- Goods trade with Latin America rebounds between 2009 and 2010; EU trade deficit falls by a third - Statistics in focus 15/2011
- Balance of payments statistics and International investment positions (t_bop_q)
- International trade in services, geographical breakdown (t_bop_its)
- European Union direct investments (t_bop_fdi)
- Balance of payments statistics and International investment positions (bop_q)
- International trade in services, geographical breakdown (bop_its)
- European Union direct investments (bop_fdi)
- International trade, see:
- International trade data (ext)
- International trade detailed data (detail)
- Traditional international trade database access (Comext)