War between Russia and Ukraine and the reflections on the Manaus Free Trade Zone

Crisis in Europe; specialists comment on impacts on the Manaus Free Trade Zone Photo: Promotion

Malu Dacio – Cenarium Magazine

MANAUS – The intimidations by Russian President Wladimir Putin to Ukraine went beyond threats and turned into a war conflict, in fact, in Eastern Europe. The impacts are already seen all over the world, and Brazil would be no different.

Experts sought by CENARIUM MAGAZINE pointed out the consequences for the economic sector of the State, especially for the Manaus Free Trade Zone. Marcus Evangelista, economist and president of the Regional Council of Economics (Corecon-AM) explains that the ZFM model imports various inputs and the war may affect the supply of components.

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“The model (MFTZ) imports various inputs. If the war takes a long time to be finished, great powers can get involved and it can affect the supply of components. This would directly affect the products that depend on these parts for their manufacture”, Marcus conceptualizes.

The first damage, for the specialist, is the issue of oil. According to the economist, the Amazon is very dependent on freight and practically everything that is consumed here does not come from local production and arrives by ferry or plane.

“As Russia is a major producer of oil and oil products, the war will affect the price of oil, which should rise, directly influencing Petrobras, which should adjust prices upwards, and will increase the cost of freight, which will consequently affect the prices of various consumer products that come to the Amazon. And this should occur in the short term”, Evangelista pointed out.

The oil has already surpassed the barrier of US$ 100 dollars and according to Marcus, in the market, there are rumors that it can go up to US$ 150 dollars in a short term. The increase in fuel prices is directly linked to the increase in inflation.

The expert also explains that there are no options to ‘escape’ these increases. “Since we are isolated, geographically, we have no choice but to adjust to the new prices”, he said.

‘May diplomacy win’

The vice-president of the Federation of Industries of Amazonas (Fieam), Nelson Azevedo, assented to the lines of the president of Corecon-AM, Marcus Evangelista and defended that the industries of the Manaus Free Trade Zone feel the impact of the rise in oil prices.

“As we know, oil has an important participation in the energy matrix of the economy and in the production of components for industry in general. The rise in the price of this item will put upward pressure on prices and inflation”, said Azevedo.

“The industries in the MFTz feel the rise in oil prices in logistics and in the acquisition of components, which increasingly use raw materials derived from this product”, argued Nelson.

In the end, the representative of Fieam hoped for better moments and the resolution of conflicts. “May diplomacy be the winner in this conflict that brings so much harm to all countries, even those that are far from that region”, he concluded.

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