After four months of crisis with the West, Russia decided to attack Ukraine this Thursday (24), inciting the most serious military crisis in Europe since the Second World War.
Understand how conflict can affect the Brazilian economy.
Oil and gas are already more expensive
The price of oil on Thursday (24) exceeded US$ 100 for the first time in more than seven years, after Russian President Vladimir Putin announced a military operation to “protect the people of the Donbass”, the region of east of the neighbor.
Russia is one of the major oil producers, and a military conflict affects the oil market. In addition, sanctions imposed by the US and the European Union can also put pressure on the price of energy, directly and indirectly.
If the war brings the Euro-Russian fuel trade to a halt, Europeans will have to look elsewhere for energy, in a world market that will get even tighter and more expensive unless Saudi Arabia betrays its informal ally Russia. in the cartel of large producers, and increase its production of the product, wrote the columnist for sheet Vinicius Torres Freire.
On Tuesday, for example, Germany had already frozen the certification of the Nord Stream 2 gas pipeline, which connects Russia to the European country and is ready, but unable to operate due to the crisis in Ukraine.
On Wednesday afternoon, US President Joe Biden also announced sanctions on Nord Stream 2 AG, the company responsible for the pipeline, and its directors.
About 66% of the gas and 29% of the oil that Germany buys outside the European Union comes from Russia. About 44% of the gas imported by the European Union comes from Russia, as well as 25% of the oil.
Nord Stream 2 would double the capacity to transport natural gas across the Baltic Sea, allowing Russia to divert supply that today is mostly made through Ukraine and the turbulent allied dictatorship Belarus.
Food prices may rise
Ukraine sells 17% of the world’s corn, a relevant weight, although it lags behind the USA, Brazil and Argentina. Ukraine and Russia export 30% of the wheat purchased by the rest of the planet.
Despite this, last Friday, the media specializing in grains was more concerned about the soybean and corn crop in Brazil and Argentina, which was affected by bad weather. The main concern related to the conflict was the rise in the price of wheat, in passing.
Instability drops stock price and makes dollar rise
Whenever there is a serious political crisis, riskier securities such as equities are affected. After the invasion was announced, global equities and even US Treasury bonds plummeted, while dollar, gold and oil prices soared after Russian troops launched an attack on Ukraine.
Investors’ search for global security boosted the dollar, which rose more than 0.5% against the basket of currencies of its main trading partners. The euro, in turn, fell 0.8%.
The Russian currency, the ruble, plunged almost 8% even after a pause in its trading, reaching the lowest level on record. Russian Central Bank announced market intervention to contain fall.
The move also contaminated cryptocurrency markets, causing bitcoin to drop below $35,000 for the first time in a month.
Energy and rising dollar put further pressure on inflation
Even with the dollar closing in Brazil this Wednesday (23) at R$5.003, the lowest price of the American currency since June 30, 2021, the persistent highs of oil and food nullified the possible relief and prevented Brazilian inflation, already high, give in.
In addition, economists already had an assessment that the trend for the real until the end of the year was for the real to devalue (that is, for the dollar to rise), while commodity prices tend to remain at high levels. .
Therefore, inflation projections for 2022 continue to deteriorate even before the impact of the war on the dollar.
The war in Ukraine affects prices of oil, natural gas, grains and cooking oil, at least, making food more expensive in Brazil as well.
The prices of the Brazilian industry, which were already under pressure due to the very expensive dollar until December and the persistent world shortage of inputs, should also suffer a new impact with the rise of the American currency.
Instability affects growth
Depending on the size of the war, the impact on economic confidence could be large and extend for at least a few months, which would reduce the prospects for economic growth.
Fearful entrepreneurs and investors often put off new projects or expansions, which means fewer jobs.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
