Thailand, Southeast Asia’s second-largest economy and one of the region’s most impacted during the pandemic, is feeling the economic impacts of war between Russia and Ukraine in key industries.
Vietnam, like Thailand, is suffering the economic impacts of war between Russia and Ukraine.
Getting Thai fresh fruits and vegetables onto Russian store shelves has become nearly hard for Bangkok-based exporter Peyton Enloe.
Russian customers are cutting back on frills as the rouble’s value falls to record lows. Not only that, but the Aeroflot jets on which Enloe relies to deliver his products are running out of room as flights load up with Russian tourists who are cutting their vacation short.
“We’ve basically lost market access to Russia,” said Enloe, managing director of Purithai Vegetables, which supplies fresh and frozen produce to Europe, America, and Russia.
“My Russian customers told me people don’t have money to even buy the basics, let alone ‘exotic’ produce like mangos, durians, rambutans.”
The Russian economy is being hammered by sanctions imposed by the West in response to Russian President Vladimir Putin’s invasion of Ukraine.
However, as the economic turmoil spreads around the globe, the prognosis for Asia has also taken a dramatically negative turn.
The region’s fragile post-pandemic recoveries have been called into question as oil prices approach $140 per barrel, threatening a new round of rising inflation and supply chain constraints – challenging governments that have already spent heavily during the pandemic to find additional resources to protect their populations from rising costs. Analysts predict that oil prices will climb even more after President Joe Biden issued an embargo on Russian oil, gas, and coal imports on Tuesday.
Putin’s military operation in Ukraine has hindered the movement of commodities between continents, with major shipping companies such as Maersk and CMA CGM saying that they will no longer use Russian ports. Asia’s greatest economies also rely on imported oil and gas, of which Russia is the world’s third and second-largest supplier, rendering them vulnerable to rising energy prices.
“Asia will not be impacted as much as Russia or Europe,” Tommy Wu of Oxford Economics in Hong Kong told the media. “But higher global energy prices and slower global trade will weigh on Asia’s recovery, notably for countries that rely heavily on oil imports such as Japan, South Korea and India.”
For China, which has refused to censure or penalize Russia, any protracted drag on global development caused by the conflict is bad news, even if Beijing increases economic cooperation with a more friendless Moscow.
“As Russia becomes increasingly isolated, it will lean more heavily on China as a trading partner,” Julian Evans-Pritchard, senior China economist at Capital Economics, said in a conference last week.
“That will present some opportunities for Chinese firms to take market share from western suppliers and to buy energy at a discount. But any such gains will be small when set against the cost to China of higher commodity prices and the dent that those price rises have put in real consumer incomes in China’s major export markets.”
Thailand, Southeast Asia’s second-largest economy and one of the region’s most impacted during the pandemic, is feeling the economic impacts of war between Russia and Ukraine in key industries.
Despite the fact that Russia accounts for only 1% of Thai exports, companies doing business in the country are experiencing severe supply chain interruptions.
Flying fresh farm food to Russia and Europe is critical for Enloe, an American who has been working in Thai agricultural firms for over a decade.
“Aeroflot has been banned from most European countries already,” he said. “In the long term, that will be a problem.”
Russia has also been the greatest supplier of travelers to the kingdom as it strives to relaunch its tourism sector following a two-year hiatus due to the epidemic.
Since the attacks, many Russians have had to cancel vacations in the country in order to handle business or other matters at home, or because the rouble’s fall rendered their stay 30 percent more costly overnight.
Those who remain in Russia and desire to go have difficulty in paying for their journeys after Russian banks were shut off from the SWIFT international payments system.
In the midst of the economic turmoil, Thailand’s Prime Minister Prayuth Chan-O-Cha has appealed to the population for patience.
“We’re discussing measures to freeze the price of petrol. But we can’t just help everyone,” he told the media last March 1. “As you know the government doesn’t really have money so you should understand us.”
Small shippers at Thailand’s Leam Chabang port are already requesting an oil surcharge of nearly 4% from freight customers, according to one European firm that spoke to Al Jazeera on the condition of anonymity, with those costs likely to be quickly passed on to consumers who have been having problems with months of rising prices.
Thailand’s Commerce Ministry stated on Friday that inflation in February reached 5.28 percent, the highest rate in 13 years and much beyond projections.
Analysts predict that the crisis in Ukraine would derail aspirations for a quick economic rebound in 2022.
“We’re going to feel the pain deep into this year and most likely into the next,” Chaichan Chareonsuk, chairman of the Thai National Shippers Council, told the media. “The geopolitical situation, global inflation, the pandemic – Thailand still has a high number of cases – and freight costs are still very high. All of that is certain to damage our growth.”
