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News > Ukraine

Russia-Ukraine Conflict Fosters Inflation in Latin America

  • View of some commodities.

    View of some commodities. | Photo: Twitter/ @PopescuCo

Published 4 March 2022

Colombia and Paraguay could face problems with the supply of fertilizers since Russia controls 13 percent of the world trade in products of this type.

The increase in commodity price triggered by the Russia-Ukraine conflict is benefiting some Latin American economies that export large quantities of raw materials. However, their windfall profits are also accompanied by strong inflationary tendencies that reduce the well-being of consumers and producers globally.


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Luciano Codeseira, the director of the Gas Energy Latin America Consulting Firm, said that Brazil and Guyana will be the oil-exporting countries most benefited by the rise in prices. While Venezuelan and Ecuadoran oil prices will also improve, Argentina will be affected by the growing need to import more Russian liquefied natural gas as the austral winter approaches.

"The affected countries will be able to balance these costs with better prices of their exportable commodities," Codeseira suggested. Since Russia and Ukraine concentrate about a quarter of world exports of wheat, corn, and sunflower oil, agricultural products from Argentina and Brazil will benefit from better prices amid the war.

However, they are not likely to have a big harvest this year due to drought and the fertilizer prices, which have increased since Russia controls 13 percent of the world trade in products of this type. Experts agreed that Colombia and Paraguay could face problems with fertilizers’ supply and eventually suffer cuts in their agricultural production.

In Colombia, they also fear that Russia’s exclusion from the Swift interbank payment system will harm their beef exports to that country. "We will not be able to pay or be paid goods marketed with them. This situation is a severe blow to the sectoral GDP," the National Council of Agriculture Secretaries President Rodolfo Correa warned.

Global Sovereign Ratings company Vice President Michael Heydt pointed out that the conflict will potentially lead to capital outflows from Latin America. “If this happens, the value of local currencies will decrease, and the inflationary tendencies grow by over 2.1 percent,” he stressed.

"Commodities' high prices resulting from the war will lower real household incomes and the consumption capacity of citizens. Therefore, we project low regional economic growth this year," he added.

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