OBELA Analysis

The global change of the energy matrix gained momentum in the 2010s thanks to technological advances for electricity generation with renewable energies; international agreements in favor of the environment; and climate change.

Latin American countries are in the process of changing the global energy matrix and have had several advances. The COVID-19 pandemic paralyzed the world and the economy. Latin America was no exception and it seems that this may have slowed down renewable energies.

The energy transition in Latin America is underway. Government incentives and continued Chinese investments and loans will be key to its development.

Over the past year there has been a generalized increase in inflation around the world. The reasons for this are, on the one hand, the structural characteristics of each particular market and, on the other, the effects of fiscal, monetary and regulatory policies.

The economic contraction and slow recovery in production indicate that the demand for gas as a source of energy to power industry and electricity generation has not put pressure on the market.

Gas is an input for industry and power generation; higher international gas prices may increase overall production costs and lead to higher inflation.

With the onset of the COVID19 pandemic and the application of the first measures of social isolation and the closure of non-essential economic activities, the financial market collapsed and the commodities market began a new cycle of price contraction.

The recovery of commodity prices has had two moments. The first was marked by strong injections of liquidity into the markets and low interest rates. The second moment occurred when the upward trend extended beyond the recovery of previous levels throughout 2021.

The effect of rising commodity prices has been a combination of multiple factors. Its behavior, although presented as a short-term trend, may induce inflationary processes in the long term.