Experts warn of repercussions for Thailand’s economy from prolonged Russia-Ukraine tensions


Experts on Wednesday advised the government to keep an eye on Russia-Ukraine tensions, as it could affect Thailand's economy.

Amornthep Chawla, head of Research Office at CIMB Thai Bank, said tensions between Russia and Ukraine should be monitored closely even though it was likely there would be negotiations rather than a battle between the two countries.

He said the tensions had caused short-term volatility in financial and capital markets, and it would affect Thailand's economy if the situation prolonged, including impacting inflation, exports and tourism.

He warned that inflation would be the biggest threat to Thailand's economy because Russia is the world's largest oil and natural gas exporter.

"If Europe imposes sanctions on Russia and turns to other alternative energies, oil price would soar to US$120 [Bt3,900] per barrel," he said, "This will cause inflation to rise sharply in Thailand and other countries."

He expects the situation to persist until the second quarter of this year.

Amornthep said that even though Thailand's exports to Russia were worth less than $1 billion, the country's exports would be hit if Europe suffers an economic slowdown as a result of the tensions.

"Meanwhile, the number of Russian and European tourists visiting Thailand would drop due to the impact of the tensions," he added.

Dr Pipat Luengnaruemitchai, chief economist at Kiatnakin Phatra Securities, said the battle between Russia and Ukraine is likely to continue as Russia believes that it is an important gateway to Europe and the global economy.

"We believe that Russia has already prepared plans if Europe imposes sanctions on the country," he said.

He did not think that Russia-Ukraine tensions would have a severe impact on Thailand, but it would cause investors to turn to safe-haven assets due to high volatility in the financial and capital markets.

Chao Kengchon, managing director of Kasikorn Research Centre, said Russia-Ukraine tensions will not lead to the use of force.

"If western countries impose sanctions on Russia, Thailand's economy would be affected a little bit due to Russia's economic slowdown," he said.

He added that Kasikorn Research Centre's outlook on Thailand’s economy had not changed yet despite the Russia-Ukraine tensions.