Region can meet commodity needs

Caribbean and Latin American countries are being challenged to step up to the plate and satisfy world demand for some commodities that would usually be sourced from Russia.

President of the Inter-American Development Bank (IDB) Mauricio Claver-Carone said he was confident the region had the ability to adequately supply its own needs and that of the rest of the world for various products normally sourced out of Russia, which have been impacted by supply chain disruption due to the ongoing war in Eastern Europe.

He singled out fertilizer, wheat and corn as some of the commodities for which production in the region could be ramped up to offset the supply challenges now being experienced.

“If we can break that conundrum, Latin America and the Caribbean, from a food commodity side – wheat and corn – can become an offset to the challenges. I think frankly, whether it is the United States or any country in Europe, will be better off importing wheat, corn and other food products from Latin America and the Caribbean than Russia,” said Claver-Carone.

“I believe that Latin America and the Caribbean can play and should play a major role as an offset to the commodity impacts that we are seeing to the East,” he said.

He said he believed the region was also in a good position to accelerate its own transition and that of the rest of the world, to renewable energy sources.

However, he indicated that the region will need to ramp up productivity, and in the case of Latin America’s mineral mining, engage in more responsible practices.

The IDB president said “Russia’s war of choice is a global tragedy and a shock to the world order.”

He warned that the ramifications were yet to be fully felt.

However, he acknowledged that some of the IDB’s borrowing members have already been feeling the pinch on their financial markets, in inflation and the flows of commodities including gas, wheat and metals.

“These dynamics are compounded against the backdrop of an incomplete recovery from an ongoing pandemic. And as COVID-19 has revealed our deep global interdependence, so too has the war in Europe,” he said.

Recalling that the world was recently scrambling to correct the overreliance on China and the need to diversify supply chains, Claver-Carone pointed out that Latin America and the Caribbean were caught in a similar position as a result of the war in Eastern Europe.

“Not only should we be working together to mitigate the economic effects on the region, but I believe Latin America and the Caribbean can play and will play an important role in offsetting commodity impacts for the entire world,” he said.

His remarks were delivered while he addressed the annual meeting of the Board of Governors of the IDB and IDB Invest on Monday.

He also pointed to the need for countries in the Caribbean and Latin America to address “acute challenges” of prolonged instability, violence and humanitarian crises, while singling out Haiti and Venezuela.

“We must work even harder to improve the conditions that currently prevent those countries from meeting the needs of the populations and the conditions that hold back the region at large from fulfilling its true potential now more than ever,” he said.

Claver-Carone said it was “not just an imperative but an urgency” now for the region to invest in programmes and projects that will improve social protection and inclusion, re-ignite economic growth and enable robust private sector contribution to development.

He noted that governments of the IDB borrowing member countries were facing difficult choices, with narrowing fiscal space, growing social demands and the need for speed to “pivot” from existing priorities to unpredictable events.

He said the IDB stood ready to be “a better partner, a stronger ally and an innovative solutions-based institution” to help countries bring about sustainable and inclusive growth through decisive action, while identifying job opportunities and greening economies and unlocking private sector development.

Claver-Carone said while some were predicting low economic growth for the region due to challenges including rising inflation, natural disasters and persistent structural issues, the IDB believed otherwise.

Pointing to the region’s resilience and ability to adapt during the height of the COVID-19 pandemic, growing vaccination rate and declining COVID-19 positivity rate, Claver-Carone said he was positive the region’s economy would continue to bounce back this year with higher than predicted growth rates by some countries.

“With our solutions, this region has proven that it can break the forecast and we have proven to be a forecast-breaking institution,” he said.

Earlier this year, the Economic Commission for Latin America and the Caribbean (ECLAC) predicted that growth this year would be slow, reaching around 2.1 per cent. marlonmadden@barbadostoday.bb