How did Latin America go from crisis to opportunity as a result of the war in Ukraine?

First modification: 02/23/2023 – 03:11

The war marked a before and after for global markets, even causing a reconfiguration of trade that left, after a year of conflict, many winners and losers.

Despite the economic impacts derived from the war, in Latin America “several opportunities that some have been able to capitalize on, and others have not” have also arisen in agriculture, explains economist John Escobar.

Brazil, whose economy, the largest in the region, ended 2022 with records in its exports (335,007 million dollars) and in its trade surplus (61,800 million dollars), was one of the beneficiaries.

The increase in food prices in world markets caused Brazilian agricultural exports to grow by 36.1% last year, to 75.05 billion dollars. “Despite all the negative effects of a war like that, Brazil was one of the main beneficiaries of the new global asset flows,” said economist Silvia Matos, a researcher at the Getulio Vargas Foundation, FGV.

“A war like this is very bad for the world. We had global inflation and with it a slowdown in growth to combat that inflation, in addition to the humanitarian tragedy in the region. As Brazil is far from the conflict, it benefited from the effects generated by the war, mainly in the prices of raw materials”, Matos commented.

Another country in the region whose agricultural exports grew was Argentina, where the main agricultural complexes -responsible for 63% of total exports- increased their income by 8.5%, up to 46,461 million dollars, directly benefiting from the rise in prices. prices in international markets, although the quantities exported fell by 5.5%.

Unlike Brazil, in Argentina the positive impact on sales “was far exceeded” by the need for a greater outlay to pay for energy, fertilizers and freight, among other goods, according to a report by the Rosario Stock Exchange.

Some countries in the region also took advantage of the situation to increase their exports of gas, coal and oil. An example of them was Peru, whose sales of liquefied natural gas and oil rose by an average of 57.9% in 2022.

Exports from the oil sector also increased by 36.15%, with increases, in crude oil, of 75.7%. Brazil and Colombia increased oil exports, the price of which skyrocketed in 2022 as a result of the conflict. According to Matos, in 2022 Brazil had record tax revenues from exports of oil and derivatives, which accounted for 2.6% of GDP.

In Colombia, the state oil company Ecopetrol shot up its net profit in the first nine months of 2022 by 150.1%. Argentina also raised energy imports by 4% in volume, although due to the rise in prices it had to double spending compared to the previous year, with which the increase in its energy exports by 44% was not enough to balance the energy balance , which deepened its deficit.

with EFE