Exporters beginning to benefit from weaker currencies

The recent increase in manufactured exports may be the first sign that Latin American industry is beginning to feel the benefit of weaker currencies. Nominal exports grew by 2.2% y/y in July, having contracted by an average of 0.9% y/y in the first half of 2013. Our calculations show that whereas previous increases in nominal exports have tended to be due to the effect of higher commodity prices, around half of the increase since the start of the year has been due to stronger international sales of manufactured goods.  If the recent depreciation, which has seen most currencies weaken by 10-15% against the dollar since the start of the year, is sustained, then exporters could get even more of a boost over the coming months.