OBELA Analysis

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.

In July 2021, the OECD and G20 countries presented the "Declaration on a two-pillar solution to address the fiscal challenges arising from the digitalization of the economy" that aims to alleviate the fiscal pressures arising from the covid-19 crisis and adapt to the digitalization of the economy. The structure of the tax reform will be based on two pillars.

Pillar one seeks to develop profit tax rules for companies that are highly digitized and conduct operations around the world. While, Pillar two continues BEPS taxation efforts with the introduction of a global minimum tax regime.

The implementation of these rules will help to improve economic recovery in countries that face difficulties in their tax collection, such as Latin American countries.