Clouds of smoke mark the impact of the Israeli bombings this Monday in Gaza.MOHAMMED SALEM (Portal)
Stock and financial markets in Latin America opened lower this Monday. It is the first economic consequence of the risk aversion with which global investors reacted to Hamas’ surprise attack in Israel this weekend. With a rise in oil prices, Latin American economies are at risk of increased inflation, while fears of recession in the US and China could negatively impact growth in the region.
Latin American currencies fell against the dollar on Monday morning as some investors preemptively sold assets in countries in the region amid uncertainty caused by the Hamas attack. Two net oil exporting countries, Brazil and Colombia, will benefit from the price increase caused by the conflict in Israel. However, other producing countries such as Mexico will not see a net profit as they are ultimately importers of petroleum products.
According to Israeli Prime Minister Benjamin Netanyahu himself, the conflict quickly escalated into a “war,” raising fears that it could spread to other countries in the Middle East, a key region for fuel production and trade. At the global level, the rise in oil prices will lead to an increase in the cost of living and volatility, explains Alfredo Coutino, an analyst specializing in the region at Moody’s Analytics.
“If quick negotiations do not take place, we will have an oil price of around 100 per barrel and that is already a very negative element for the main engines of the world, such as the United States and China,” says the telephone call specialist. from Washington. The United States is the main buyer of Mexican and Central American products, while China is the main importer of goods and raw materials from South American countries.
“When the price of oil in the United States approaches 100 and stays there for a while, that has historically been a sign that the economy is headed for recession,” Coutino says. For his part, the General Director of the Bank for International Settlements, Agustín Carstens, responded on Sunday to a question from a journalist about risks on a global scale. “It’s too early to say,” he replied, according to Portal.
The conflict is taking place in the Middle East and could disrupt oil trade flows in the region and also affect other countries. In this context, WTI started the week up 4%, trading at $86.15 a barrel, while Brent gained 3.91% to trade at $87.89 a barrel, according to data from Banco Base. “Tensions in the Middle East could rise,” Gabriela Siller, the company’s director of analysis in Mexico, warned in a report, “as the United States has sent military support to Israel and speculation is that Iranian security officials were helping to plan Hamas’ surprise attack over the weekend Have helped”. . Oil price increases have minimal impact on the foreign exchange market, where risk aversion prevails.”
“Right now this is a very focused conflict between two parties. In this sense, we can hope that this will not have a significant negative impact on the rest of the world and in Latin America in particular,” says Countino. The decline in the financial markets was not “virulent,” says the specialist, “and that is because the fact that it is a conflict that has so far been contained is being taken into account by the financial markets.” It still exists Hope that the conflict will not be overcome or at least will not last for a long time that could have an impact on the economy of the rest of the world.
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