Ukraine-Russia Conflict Shakes Global EconomyBy Emilio Aristegui | Wed, 03/02/2022 - 14:29
Russia’s invasion of Ukraine will most likely wreak havoc on the global economy, said S&P Global Ratings. With no ceasefire in the horizon, uncertainty continues to reign throughout the EU and the world.
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Linking wages to effort in employee labor is vital for people to improve their financial decisions, according to Nima Pourshasb, CEO and Co-Founder, Minu. Pourshasb highlighted that only 12 percent of Mexicans have a savings account; mainly due to lack of interest, complex mechanics to allocate payrolls and the lack of returns from banks. For employees who just began saving, the introduction of small amounts of savings is vital to promote financial inclusion.
The recent conflict is likely to bring higher inflation, disrupt financial markets and reduce growth, complicating Mexico’s economic recovery. The Mexican Stock Exchange (BMV) fell to levels not seen since January, according to Reuters. The Mexican Peso also suffered a 1.4 percent setback due to the unfolding war. Mexico’s Minister of Foreign Affairs Marcelo Ebrard explained that the country will maintain diplomatic relations with Russia.
The Bank of Mexico (Banxico) reported that the country continues to face adverse conditions regarding inflation, as it seeks to implement adequate economic policies to ease the pressure. “The Governing Board evaluated the magnitude and diversity of the shocks that have affected inflation and its determinants, the risk that contaminate the expectations of medium and long terms and price formation, as well as the greatest challenges in the face of tightening global monetary and financial conditions,” reads Banxico’s press release.
Juan José Cervantes, Managing Partner, Trebol Capital, explained the two reasons why fintech is being successful. “First, the flexibility that fintech companies have against the different players in the industry to be able to perform different functions much faster and with a much more personalized approach. Secondly, they propose solutions to problems that the traditional financial industry cannot solve, either due to regulation or operation, to generate greater efficiency in the use of resources.”
S&P Global Ratings explained that possible scenarios for the world economy will most likely include the shock of global markets, uncertainty for investors and supply chain disruptions around the world. The human cost of the conflict will cause a major toll for the world’s morale, while roiled financial markets and an increase in oil prices will also affect the global economy, said S&P.
Emilio González, General Manager, Nu, explained the importance of financial inclusion. “In a country like Mexico, where financial inclusion is extremely low, even compared to countries with similar development in Latin America, we believe that increasing financial inclusion means a great deal. It can have a huge impact on the overall economy and wellbeing of millions of Mexicans.”
Banxico announced that remittances grew 19.6 percent annually in 2021. While Mexican remittances sent abroad remained at similar levels during Jan. 2021, remittances from around the world to Mexico increased. “In the first month of 2022, income from remittances from abroad stood at US$3.9 billion derived from 10.6 million transactions, with one shipment average of US$371,” reads Banxico’s press release.
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