Thai economy likely to take indirect short-term hit from Russia-Ukraine war
Thailand’s economy will suffer from indirect impacts of the military conflict between Russia and Ukraine, with reduced consumer confidence and higher cost of living, Thai Chamber of Commerce chairman Sanan Angubolkul said on Thursday.
In addition to the short-term effects, he advised that the Thai government and businesses prepare for possible long-term impacts of worsening hostilities between the two countries.
“Short-term impacts will be limited for Thailand, but we will see them indirectly. Oil prices in the global market have exceeded $115 per barrel and could easily surpass $120. This has caused petrol prices in Thailand to rise 5-7.5 baht per litre,” Sanan said.
“This will certainly affect consumer confidence. People will be more careful about spending, as the prices of goods become expensive,” he added.
The chamber chairman noted that Thailand’s combined trade with Russia and Ukraine accounted for only 0.5 per cent of the country’s total exports and 0.9 per cent of total imports.
Regarding a Western-led ban on Russian banks from the SWIFT system of international money transfers, Sanan suggested that Thai businesses consider payments through Russian banks that have not been banned and through China’s Chartered Institute of Procurement and Supply and a third country.
SWIFT stands for Society for Worldwide Interbank Financial Telecommunication.
Sanan said chamber representatives had met with Ministry of Commerce officials on Wednesday to discuss this matter.
The group expected many Thai industrial sectors to suffer from the impact of the Russia-Ukraine war. Among them are animal feed, steel, automobiles, processed foods, cosmetics, jewellery, and tourism.
Sanan noted that Russia is a major buyer of Thai cosmetics and jewellery, and the market is growing. Also, Russians are the largest group of foreign tourists coming to Thailand following the relaxed Covid-19 immigration rules.
Due to the armed conflict, the number of Russian tourists expected to visit Thailand this year is likely to decrease by half — from an estimated 500,000 to only 250,000.
The chamber chairman also pointed to logistics issues, such as a potential shortage of shipping containers and higher freight charges caused by increased risks of shipping to the war zone.
He suggested that Thai exporters turn to land and rail transportation to Russia and Ukraine through their neighbouring countries.
