Economic analysts in Mexico warn that the escalating conflict between Russia and Ukraine could have dire consequences at home and abroad.
As the former internal revenue secretary, Agustín Carstens, put it in 2008, “If the United States gets a cold, we get pneumonia.”
The impact is likely to be felt first by energy markets which are expecting a price hike of approximately 20%.
Germany announced Monday the suspension of the controversial Nord Stream 2 natural gas pipeline following Moscow’s actions in eastern Ukraine.
The conflict is also likely to impact other industries such as steel production and other natural resources, leading to more inflation.
“Mexico and Russia are not major partners, but we lived in an extremely interconnected world. It is extremely likely that Mexico and the rest of Latin America will be feeling the effects of this unfortunate conflict in the short term,” Monex’s chief economic analyst, Marcos Arias Novelo, told El Financiero.
There is also the concern that the fledgling conflict in Eastern Europe could destabilize several currencies, including the Mexican Peso.
So far this year, the Mexican peso has experienced considerable variations in its exchange rate and inflation of 7%, the worst level in such a short time since the 1990s.
To make matters worse, the IMF has cut its projections for Mexico’s economic growth to just over 2% — a far cry from President Andrés Manuel López Obrador’s projections.
Mexico’s government has already evacuated its embassy in Kyiv while announcing plans to help evacuate its nationals from Russia and Ukraine.
“Mexico continues to push for a diplomatic solution to this crisis and is happy to offer its assistance in this regretable matter,” said Ebrad.