The inflationary winds of war are receding

The effects of the Russian and Ukrainian war have begun to wear off. The impact of prices is beginning to fade and what is being observed is a moderate decrease in prices, with lower inflation as summer approaches.

According to the prestigious Spanish economist Juan Carlos Martínez Lázaro, a phase of “forgotten war” has already been reached.

In fact, the FAO (United Nations Food and Agriculture Organization) announced this Friday its moderately downward price index compared to January. Also, in an international trade note, the WTO (World Trade Organization) reported the impact of the measures taken by the member countries after the impact of Covid-19, the follow-up and the Russian war in Ukraine, with applications of restrictions on the trade, subsidies and other provisions that affected prices in 2022.

“The problem of the Russian war in Ukraine has become chronic and we have learned to live with it,” said economist Martínez Lázaro, who observes that many of the expected effects did not occur and have begun to fade this summer. He argues that they have learned to live with the normality of the war on the European border, and although many of the effects will continue to be complicated, such as the increase in the cost of raw materials, especially energy, they are being diluted. In the case of the price of diesel, the value is cheaper in Europe than a year ago, when Russian President Vladimir Putin had not yet advanced in the invasion. Other goods and raw materials such as oil are also below pre-war levels, explained the economist at IE University in Madrid, Spain.

He estimates that if the war did not persist, these products would have lower prices.

“I think that although the issue of war is going to become chronic, most of its economic effects have already passed and, for the whole of Latin America, especially for those countries that export raw materials, it could be an opportunity,” explained Martínez. Lazaro to Listin Diario.

Russia is an important supplier of energy raw materials and also of grains, goods that the region imports, but that can be substituted by regional productions.

In the case of Ukraine, this country was a strong producer of sunflower oil, whose production has been affected by the war and in the case of olive oil, produced largely in Spain, there is a higher price due to the drought, a situation that the economist attributes to a circumstantial case, regardless of the war. Sunflower oil is of great industrial use in Spain, which is why the prices of many foods have been affected. Another effect of the conflict was the cutting of maritime routes from those countries at war, considered granaries of Europe and in which the impact has also been diluting and productions have been moving. The rise in food prices has been moderating, he said.

DR, a booming economy

In the case of the Dominican Republic, the economist affirmed that the development and stability exhibited by this economy is clear, which he affirms is booming. Martínez Lázaro is the director of the Report on Spanish Investment in Latin America, presented at Casa de América in its fifteenth version, with the support of Auxadi, Iberia, IE University and LLYC.

The report prepared on the basis of a consultation with 108 Spanish companies, of which 75 are multinationals and 35 are listed on the stock market, between September and December 2022. Mexico was once again the country in which the most Spanish companies are thinking of increasing their investments during 2023, followed by Colombia, Chile and Brazil. While Panama, Uruguay, the Dominican Republic, Mexico and Colombia reach the best valuation.

Consulted in this regard, he explained that the reason why there is not a higher percentage of investments in the Dominican Republic in relation to the size of investments in Mexico is due to the large size of the Mexican market and the large number of industrial and maquila companies what’s wrong with it.

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