Thai economy shrinks amid Russia-Ukraine conflict: TCC
The Ukraine-Russia war has already caused the Thai economy to shrink, the Thai Chamber of Commerce (TCC) reported on Wednesday.
TCC chairman Sanan Angubolkul said the chamber is closely monitoring the situation.
In his opinion, the Russian economy is still strong even though the value of the rouble has taken a dive.
He said Russia has not used the full force of its military power so there still might be a chance for a peace breakthrough.
The war has sent the oil price soaring and the Thai economy to shrink, Sanan said, expecting the government to be able to keep the fuel price on the stable side until March.
He suggested that the government prepare a plan in advance as the situation might prolong and the oil price could stay at high levels all year long.
Sanan said the government measure cutting excise tax on diesel for generating electricity for six months might help the public as the power price would decrease by 1-1.5 baht per unit.
However, he said, the government must also plan for other emergencies because the situation is uncertain and it would be difficult to evaluate how long Thailand can keep prices from skyrocketing.
Sanan said the TCC is monitoring the rise in product costs, especially those to do with corn, wheat and sunflower seeds because of a shortage of these crops.
Moreover, rare earth elements might affect circuit board and chip manufacturing and will increase the import costs for related products, he warned.
The TCC is also worried about the rising fertiliser price because Thailand imports 5 million tonnes of fertiliser per year. If the price shoots up, farmers will be forced to use less fertiliser and this would affect production.
Sanan said this problem would crop up soon, so the government needs to prepare for it.
As for trade with Russia and Ukraine, Thailand has not been affected much directly, but it has been affected a lot indirectly because the price of many products is increasing, Sanan said.
Furthermore, the issue of shipping prices is worrying, especially international freight rates, he said, advising the government to allow the baht to weaken so exports won’t be affected to a major extent.
The TCC is also concerned that the economy would be affected by stagflation or high inflation while economic growth slows. The increasing cost of living will be higher than the expected revenue, so this situation too requires close monitoring, Sanan said.
The TCC believes tourism is a key factor for economic recovery, so Thailand should maintain a neutral stance in the conflict and welcome travellers from all countries, he added.
