International dynamics do not give a truce to the economy and international trade, which leads organizations and analysts to constantly review economic projections for the coming months. What is certain is that it is no longer possible to predict what will happen in the global economy, and the alternative is to limit oneself to identifying possible scenarios.
Currently, all the world’s attention is focused on the Ukraine War, which began in February 2022 and is escalating, given the annexation of four more Ukrainian provinces by Vladimir Putin. Along with Crimea, annexed in 2014, Russia controls 22% of Ukraine’s territory and the richest portion in agricultural and mineral products. Added to this is the possible use of nuclear weapons by Putin.
But unexpected limits were also reached in the confrontation between the United States and China over Taiwan, given the visit of the Speaker of the United States House of Representatives, Nancy Pelosi, to the island. As tensions between the two major world powers stabilize, North Korea is making its presence felt with a series of missile launches, some of which have even crossed Japanese territory.
In this context, the main world economies face enormous challenges and already show very poor economic results until this moment of 2022. Naturally, the war in Ukraine had an impact on international prices, not only of food products, but also of energy, which affected the domestic prices with high levels of inflation in recent months.
Recently, and due to the monetary and financial policies (interest rates) followed by the main powers, in addition to a certain recovery and increase in supply levels, international prices have suffered a significant drop, although they remain at historically high prices.
On the other hand, there is the China factor, which has suffered from the effects of its Covid zero policy on the economy, especially the drastic decisions on mandatory quarantines and the closure of ports, as occurred in Shanghai. While a progressive lifting of restrictive measures in China is expected to begin through the Communist Party’s central committee, full stabilization may not be achieved until mid-2023.
In fact, according to data from the International Monetary Fund (IMF), in the second quarter of 2022 China’s economy fell -2.6%, while that of the United States and the United Kingdom, -0.1% (in the case of world power, would be the second consecutive quarter of decline). Meanwhile, Japan grew by 0.5% in the second quarter of this year and the euro zone by 0.6%.
Furthermore, the IMF predicts that economic growth for 2022 and 2023 will be at the lowest rates so far in the 21st century and expects an even worse situation with the complete cut off of gas supplies from Russia to the European Union, which increases the risks. of recession. On the other hand, the WTO (World Trade Organization) has revised its projections of world trade growth for 2023, and this will be the worst indices in recent decades.
In this scenario of economic globalization and interdependence, Latin America is not exempt from the global crisis, especially given the importance of the world’s main economies as export destination markets, for example China, where sales to this market are falling (as well as the aforementioned drop in international prices for some products).
Furthermore, in times of uncertainty, the dollar strengthens, which has implications for the debt levels of many Latin American countries. These, in turn, are impacted by the increase in interest rates to control inflation. This makes financing rates more expensive in many emerging economies.
On the other hand, and in addition to the effects just mentioned, some Latin American countries show better-than-expected performances, even with the upward revision of expected growth for the remainder of the year. The ability to produce agricultural products and processed foods (although there are climate threats), as well as, in some cases, energy goods in a very competitive way (with the ability to export to the world), is a huge differential in the current situation in which there are limitations of structural supply.
In a context of instability, with ongoing wars and fears of even greater difficulties, concepts linked to food security and the continuity of supply chains place many Latin American countries in a position of comparative advantage, which must be taken advantage of and complemented with structural reforms. that are still pending.
With a wealth of experience honed over 4+ years in journalism, I bring a seasoned voice to the world of news. Currently, I work as a freelance writer and editor, always seeking new opportunities to tell compelling stories in the field of world news.
