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How Coronavirus Poses New Risks To Latin America's Sputtering Economies

Seekingalpha - China's reduced economic activity could have a significant effect on Latin American exports. Except for Mexico, China is a major destination for products from Latin America's largest economies and is the number one trade partner for Brazil, Chile, and Peru.

Primary sector goods and commodities comprise the bulk of the region's Chinese sales. China purchases a hefty portion of the copper and other industrial metals produced by Chile and Peru. It is also the main buyer of soft commodities and agricultural and forestry products from Argentina and Brazil (as well as Chile and Peru) and a major consumer of Colombian and Ecuadorian oil and Brazilian iron ore.

While, in general, there has been a time lag between growth events in China and their impact on Latin American economies, the sudden stop nature of the current shock has led to immediate cancellations of transactions using force majeure clauses.

That said, there are limits to how the effect on exports will impact Latin American economies overall. According to Alberto Ramos of Goldman Sachs, although Latin American exposure to the Chinese market has risen significantly over the last two decades, exports to China as a share of GDP remain relatively modest for commodities exporters, at a regional average of 2.5%.

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