Sanctions against Russia will hurt global economy, warns Kasikornbank chief
The economic sanctions imposed against Russia after Ukraine’s invasion can affect global financial transactions and push up global inflation if the conflict persists, a top banking executive said on Monday.
“The impact of the conflict that Thailand is facing now is the surge in oil prices, which has boosted the cost of energy and business operations as well as the price of goods and rate of inflation,” Patchara Samalapa, president of Kasikornbank, said.
“Financial and capital markets have started fluctuating since the conflict erupted, forcing investors to shift their focus to safer assets.
“Kasikornbank has some large corporate clients who conduct business with their partners in Russia and Ukraine, mostly in agricultural, construction and pharmaceutical industries,” he said.
“The bank has been following the situation closely and has advised our clients to take extra caution when conducting financial transactions with these two countries, as well as embrace the risk of delay in receiving money from partners in Russia and Ukraine.”
Patchara added that if the conflict continues, the economic sanctions against Russia will not just negatively affect the Russian economy, but also Europe’s energy stability which is heavily reliant on Russia.
“Many financial institutions in Europe that conduct business with Russia will face difficulties in completing transactions, using letters of credit and seeking certification from local banks,” he added.
“In the long term, sanctions can create stagflation, which will hurt the global economy, so every relevant party should try to end the conflict as soon as possible.”
Stagflation or recession-inflation is a situation in which inflation is high, economic growth slows and unemployment remains steadily high.
Last year, Thailand’s exports to Russia were recorded at US$1.03 billion, increasing 42 per cent year on year. Major products exported to Russia include automotive parts, rubber products, machinery and parts, processed and canned fruits, plastic beads and air conditioners.
