Some Latin Trade Links Boom Despite Economy
Written by Miami Today on October 14, 2010
By Zachary S. Fagenson
International trade through Miami looks to have withstood the body blows of the worldwide downturn, but some of the region’s Hispanic trading partners are faring better than others.
Trade between the Miami Customs District — which stretches from Port St. Lucie to the Keys — and Brazil, its top trading partner, came in at $7.3 billion through July, according to a WorldCity analysis of Census Bureau data. During the same seven months of 2007, before the recession began, that figure was considerably smaller at $5.7 billion, yet still large enough to position Brazil as Miami’s No. 1 trading partner.
Chile rang in about $2.04 billion worth of trade through the region during the first seven months of 2010, but only $1.6 billion during the same time period in 2007.
Yet Spain, an important business partner for the region, hasn’t made the dramatic comeback.
During the first seven months of the year, trade between the region and Spain rang in at $397.9 million, making it the region’s 29th largest trading partner. That’s far less than the $579.8 million during the first seven months of 2008 and the $441.4 million in the same period in 2007.
Spain’s economy was one of the hardest hit in the economic meltdown. Its real estate market collapsed and unemployment lingers around 20%, highest in the European Union.
The Spanish cajas — nonprofit savings banks that were also often used to finance public projects — suffered significant hits on their balance sheets.
Late last year the cajas had about $330 billion on loan to developers, up from $50 billion in 2000, according to BusinessWeek. Today, almost half of their $1.8 trillion assets are mortgages or other realty loans. The Spanish Confederation of Savings Banks estimates 7% of the 45 cajas’ loans could sour this year.
In response, the government opened the once-closed institutions to investors, is requiring at least half of each bank’s board to be professionally qualified and is allowing each to separate its social pursuits from banking.
Many of those troubled institutions are expected to merge or be bought out by larger banks.
Still, the problems in the Spanish economy don’t seem to spell trouble for international trade in Miami and South Florida.
Enterprise Florida, the state’s economic development agency, estimated in March that Latin America and the Caribbean account for 60% of the state’s total merchandise trade while Europe accounts for a mere 16%.
"I think the expectation is that the numbers are part of a strong rebound. We expect it to keep growing strong through the end of the year," said Ivan Barrios, Enterprise Florida’s vice president of trade development services. "We hope it will hit a 20% [increase] compared to last year."
Among the Latin American nations expected to perform best in the near future are Brazil, Colombia and Peru, said WorldCity President Ken Roberts.
"I think the consensus is that Brazil will do quite well in the years to come with the World Cup and the Olympics," he said.
But Venezuela, which so far this year is Miami’s fifth-largest trading partner with $2.6 billion in goods moving back and forth, is a question mark due to political uncertainty and continuing nationalization of private businesses.
Moreover, the dollar amount of Venezuela’s trade with the Miami Customs District through July for the past three years has been on the decline.
The types of goods moving between here and Latin America remain consistent with past trends.
"I have aviation goods, scrap metal, telephone equipment, computer equipment" being exported south, Mr. Barrios of Enterprise Florida said. Coming in, as usual, are seafood, cut flowers, textiles and other consumers.
The one big change might be in the amount of scrap precious metals moving through Miami.
Since the downturn began, precious metals have been moving from Latin America, through Miami to Switzerland as a hedge, some said, against currency fluctuations.
"I think over time you will see some moderation in the amount of gold moving into Miami. I think that’s largely a concern over the global economy," Mr. Roberts said. "The bread and butter I think is, and will continue to be, the high tech goods, the heavy machinery and some of apparel that comes here and some of the refined" petroleum products.