The Inter-American Development Bank (IDB) said Monday that Russia's invasion of Ukraine and the threat it poses to food security may be an opportunity for large Latin American exporters, such as Argentina and Brazil due to the disruption in the global supply chains.
Inflation and the new situation of the global economy could lead the Latin American and Caribbean economies to a growth of less than 3 percent this year, the IDB also pointed out.
IDB President Mauricio Claver-Carone stressed that Latin America and the Caribbean should cushion the impact of the Ukrainian war on global commodities markets. The world sees new connections for the region in international trade beyond China, I believe this hemisphere can play a key role in clearing basic services for the world, he pointed out. In 2021, the region recorded an economic growth above 7%.
Claver-Carone made these remarks in his opening speech at the IDB's annual meeting, which is being held again virtually due to the COVID-19 pandemic.
The threat of high inflation, questions about the sustainability of public finances, lingering structural problems and uncertainty about the future of the pandemic, as well as jitters in global markets, could result in growth forecasts of less than 3 percent for the region, warned Claver-Carone, who also acknowledged the domino effect of the war in Ukraine on Latin America and the Caribbean.
The IDB's head also said that the current war in Eastern Europe, like the pandemic since 2020, shows the deep global interdependence, with supply chains disrupted, first of manufactured goods from China, and now, of commodities from Russia.
Claver-Carone, the first US national to lead the IDB after serving as security advisor to former President Donald Trump, said the Russian offensive in Ukraine shook the world order with profound ramifications going forward.
Some ripple effects have already begun to reach our countries, he said, pointing to the impact on inflation and commodity flows such as gas, wheat and metals. These dynamics are aggravated in the context of an incomplete recovery from a pandemic still underway, he added.
Not only should we work together to mitigate the economic effects in the region, but I believe that Latin America and the Caribbean can and will play an important role in offsetting the commodity impacts for the whole world, he went on.
Clever-Carone also pointed out that Brazil and other countries are overwhelmingly dependent on Russia for fertilizers.
If we can solve that problem, Latin America and the Caribbean, from the standpoint of food commodities, wheat and corn, can become an option.
And I think, frankly, either the United States or any country in Europe would be better off importing wheat, corn and other food commodities from Latin America and the Caribbean than from Russia, he added.
The IDB president also warned about the region's acute challenges which, he said, must be addressed swiftly in the context of growing geoeconomic and geopolitical complexities. He mentioned instability, violence and persistent humanitarian crises, especially in Haiti and Venezuela.
The IDB's annual meeting was originally scheduled for March 17-20 in the Uruguayan resort of Punta del Este, in a hybrid format (virtual and with a limited number of on-site participants). But in January it was announced that it would be virtual, from the IDB headquarters in Washington.
Also Monday, the presidency of the IDB Assembly, until now in the hands of Colombia, the host of the event in 2021, was handed over to Jamaica.