Krungsri Research Center warns on Tuesday that the Ukraine crisis may wreak havoc on Thailand’s export and tourism sectors, despite both strengthened in February.
Exports increased for the 12th consecutive month in February, totaling USD23.48 billion (+16.2 percent YoY), up from USD21.26 billion (+8.0 percent) in January, due mostly to economic recovery in trading partner markets. Furthermore, February’s foreign arrivals totaled 152,954 people, up from 133,903 in January, with Russia, Germany, and France serving as the major origin countries.
Although the export and tourism industries performed well in the first two months of this year, the outlook for both sectors may worsen in the coming period due to the Ukraine war’s effects.
Thailand would suffer limited direct effects of the crisis, as Russian and Ukrainian exports account for just 0.38 percent and 0.05 percent of Thai exports, respectively. However, the indirect effects may be significant due to the following: 1.) higher energy and commodity prices, which will increase manufacturing and transportation costs; 2.) Russia’s position as a major supplier of raw materials, and thus the potential effect of Russian sanctions on a wide range of industrial supply chains; and 3.) the war’s negative impact on global incomes and economic growth, particularly in Europe, which remains a significant market for Thai exports and tourism.
The research center forecast the tensions in Eastern Europe may cut 3 percent from Thai exports, but the economy will also benefit from rising commodity prices.