More than $300 million worth of iron and steel was imported from Ukraine last year, said economist Magin Diaz.
SANTO DOMINGO – If the war in Ukraine continues, some construction materials could increase in price and become scarce. Both Russia and Ukraine are among the world's leading producers of iron and steel, so if the conflict between the two countries persists, the situation will become complicated for global trade, and those in the construction sector that depend on these markets are no exception.
Arturo Espinal, president of the Association of Hardware Stores (ASODEFE) and Fermín Acosta, president of Constructora Crisfer, state that in the short or medium term, Russia's invasion of Ukraine will end up negatively affecting the economies of the countries and that the longer the conflict lasts, the worse it will be for all sectors.
“Ukraine and Russia are among the main steel producers, but Turkey also produces steel. However, the fact that there is this conflict between the two countries will affect all regions; this steel will not be received normally in the international market,” explains Espinal.
For Acosta, also a former president of the Association of Housing Builders (ACOPROVI), it is difficult to project how far the economic impact will reach for the world "because certainly little or much will be negative, but it is not known how long that situation will last and the longer it lasts, the worse it will be for everyone.".
The hardware store representative argues that there are a number of economic factors, such as the stock market experiencing declines, in addition to all the economic restrictions imposed on Russia, which will ultimately translate into price increases and shortages of these products, "which is even worse.".
“It will certainly have a negative impact. From my point of view, it is not yet possible to say how far it will go because we don't know how long it will last. We hope it can be resolved quickly and in the best way possible, and if it is prolonged, it could lead to an increase in prices and a shortage of materials, and the consequences are unpredictable,” Acosta stated.
Espinal said that the consequences could extend beyond the construction sector, affecting many food products and goods imported from other countries. "Even though it's far away, it affects us because the world is interconnected, and we can't see anything happening outside our immediate surroundings if it's happening elsewhere on the planet.".
According to Acosta, the economy is about perspective and perception. If people perceive risks and instability, the economy becomes difficult, inflation skyrockets, prices rise, currencies fluctuate, and this can affect not only construction but the entire economy. The central bank itself has been warning financial intermediation institutions to take measures in this regard.
What economists say
Magin Díaz, an economist, believes that the situation between Russia and Ukraine represents the greatest source of uncertainty for the entire world in 2022.
Speaking last Monday at the "thematic breakfast on the economic outlook, horizons, and challenges of 2022," Díaz stated that the crisis has impacted the prices of oil, natural gas, and coal, affecting fuel prices, the electricity sector, and commerce. "We imported over $300 million worth of iron and steel from Ukraine last year, and at least 15 percent of our tourism came from Russia and Ukraine last month."
“The Dominican government will have to face the price increase with increased subsidies and will have to reallocate spending to create more opportunities for the sectors that need it,” Díaz said, according to information published by Diario Libre.
At the event, organized by the Association of Industries of the Dominican Republic (AIRD), economist Roberto Despradel also said that, in terms of food, raw materials and oil, if compared to 2019 prices, wheat is -in international prices- 48% higher than before the pandemic, corn 88% higher, milk 49% higher, pork 91.5% higher and soybean oil 133% higher.
In addition, wood has increased by 224%, granulated urea by 189%, plastic as an input by 65.3%, and petroleum by 66.5%.
“These are the challenges we face today, and I understand that this is what has motivated the Central Bank to shift its monetary policy: from an expansionary policy to a neutral policy, with a bit more control, so as not to end up fueling the inflation we are importing,” Despradel said.
