A year after the war between Russia and Ukraine, how did it affect Peru?

This week, February 24, marks a year since the start of the war between Russia and Ukraine, despite the fact that the distance between these countries and Ukraine is more than 14,000 kilometers. Peruthe situation affected the national economy.

“Peru is an economy that is highly dependent on the external sector, and our country’s imports have been severely affected not only by the war between Russia and Ukraine, but also by this disruption in global supply chains that has occurred as a result of a product of the COVID-19 pandemic. 19,” said Anthony Medina, professor at the Catholic University of Santa Maria and member Peruvian Forum of International Relations.

Both conflicting countries are major producers of inputs such as wheat and corn, a commodity whose prices peaked in 2022. Juan Carlos Ladines, a professor of international business at the University of the Pacific, explains that this is due to the lower production of these products.

Russia and Ukraine are great exporters grain and what is the raw material for agriculture, what is deepening or displacement, what is the supply of export agricultural products (…) when the war began, there was little influence, but it intensified with the drought and when the famous urea could not be bought”, he told RPP.

According to a report by the Peruvian Center for Social Research (Cepes), an important part feeding in Peru, it depends on the supply of both products, since about 70% of the corn and more than 90% of the wheat that are used nationally are purchased from other countries.

Oil is another important product affected, as until last year Russia was the third largest fuel producer and second largest resource exporter.

“If you reject the offer Oil international how about the price? Get up, so what do we have left? we have to buy this expensive oil, and where does it affect the most? in logistics costs. In the specific case of Peru, there is also an internal situation that complicates things a bit,” he added.

From my side, Medina notes that the decline in oil supplies from abroad has made it more expensive and increased costs for all importers.

“Although Peru produces a limited amount fuel most of it is imported. In the local market, fuel has risen in price by 7 sols, gasoline 75 has risen in price by 40%, if in January 2022 it was 17 sols per gallon, today it is about 25 or 26 sols,” he said.

Internationally, oil and gas prices are currently corn and wheat they continue to change, but do not reach the maximum levels recorded last year.

At the same time, prices for food and basic services such as electricity were reported to rise. That’s why the world’s central banks have started raising benchmark interest rates to protect the family economy, said ESAN professor of administration and finance Edmundo Lizarzaburu.

“Indirectly, commodity problems caused an inflationary impact, which led to an increase in interest rates (…) It is important to consider that these tensions affect our main trading partners, the United States and China, Peru is a developing country that is in great need of international trade,” he recalled.

In Peru, the interest rate has risen from 0.25% to 7.75%, a level not seen 26 years ago, meaning that it is now more expensive to borrow when applying for loans from banks, savings banks and finance companies.

“Prices have risen quite noticeably. Thus, inflation in Peru was the lowest in Latin America, given, say, the good management of the Central Reserve Bank (BCR) was able to limit the most detrimental effects. stop the rise in prices for some resources, such as oil, which has risen by 20%; flour that has grown by at least 25%; milk by 11%,” added Mendoza.

At the moment, analysts believe that it is not yet possible to know how long military conflict It will continue to affect the strongest economies in the world, as well as Peru, but it is expected that with the start of spring in Europe in March, it will be possible to determine whether the war continues or not.