“We are the largest producers of raw materials in the world as a region,” said the Brazilian executive.
The main partner of BTG Pactual, André Esteves, was one of the most listened to speakers at the event. Waiting for the bank’s shareholders to reappoint him as president of the bank next month, he spoke about the world scenario, the rise in inflation and the opportunities for Latin America.
He explained that the effects of the pandemic on supply chains brought changes in consumption patterns.
“These factors created enormous pressure on the prices of agriculture, mining and energy commodities, and not only in the short term, but also in the medium term. The consequence is inflation and you need to have a reaction for that,” Esteves said.
For this reason, he warned that rate hikes in the world are likely and “unfortunately it is only the beginning.”
Considering that the annualized CPI for February in the US was 7.9% and that the Federal Reserve’s target is 2%, the executive said “I don’t think raising interest rates will solve this problem. We have to go further and the markets take time to adapt to new realities”.
Regarding the new inflationary pressures, he assured that “this is challenging, but not necessarily negative for Latin America. We are challenged to deal with the highest cost of capital globally. But what we are seeing at the start of 2022 is a sign that we may eventually benefit from this challenging new global scenario for a number of reasons.”
In the first place, he stressed that “we are the largest producers of raw materials in the world as a region”, which is why the rise in the price of commodities favors us.
As a second point in favor, he stressed that “in Latin America we are peaceful.”
Effects of the geopolitical crisis
Regarding the impact that investments have suffered due to the war in Eastern Europe, he said that “the issue is not to invest in Russia, but rather the geopolitical risk of where you invest. In terms of classic geopolitical risk, we are a fairly calm region of the world.”
Finally, he stressed that “culturally and geographically we are close to the west, in the same time zone as the US and we have basically the same culture, which is not very different from that of Western Europe or the United Kingdom.”
“If we properly manage our economies and maintain our institutions, if we maintain our transition and the transformations of the last few decades, I think we have a very good chance of benefiting. We have a very small sample from that beginning of this year, with all this confusion in the world.”