Latin America Could Benefit from War in Ukraine, Predicts BlackRock

In the assessment of global asset manager BlackRock, the war in Ukraine can have positive medium and long-term consequences for Latin American countries such as Brazil, Mexico and Colombia.

According to Larry Fink, CEO of the manager with about US$ 10 trillion (R$ 47 trillion) in assets, the deglobalization process as a result of conflicts in Eastern Europe will make global supply chains go through an important process of rearrangement as over the next few years.

Faced with the economic impacts generated by the war, especially for Europe, countries and large companies must start to direct their operations in a way to reduce their dependence on global partners, focusing more on regional businesses, predicts Fink.

In this scenario, Latin American countries need to be alert to take advantage of the opportunities that will arise as a result of this reorganization of the global economy, said the CEO of BlackRock.

“With the increase in inflation, all companies are asking themselves how to minimize any type of dependence. And I believe that this is a phenomenon that can be very important for Latin America”, said the executive this Monday (4), during online event promoted by BlackRock.

In a letter published last week, the CEO of the global manager defended that the war in Ukraine represents the end of globalization as we know it until today.

Head of Investment Strategies for Latin America at BlackRock, Axel Christensen added that rising commodity prices in international markets could continue to benefit raw material exporting economies such as Brazil.

However, he also recalled that the process of monetary tightening in Latin American countries started in mid-2021 to contain inflationary pressure will have negative impacts on the pace of economic activity in the region.

“It’s not an easy time to be a central banker right now,” said Christensen, noting that central banks seem convinced that they will not be able to bring interest rates to the levels necessary to contain inflation quickly, so as not to affect way too much recovery in economic activity.

In the Focus report, the median of the projections of economists consulted by the BC points to the Selic rate at 13% at the end of the year, with an inflation measured by the IPCA (Broad National Consumer Price Index) of 6.86%.