unexpectedly! The impact of the "Russian-Ukrainian conflict" on Thailand will be so great! According to the latest thai research, the conflict between Russia and Ukraine is expected to cost the Thai economy 244.7 billion baht. The Thai Chamber of Commerce (UTCC) said that if its impact is extended to the whole year, Thailand's full-year GDP growth will fall to between 2-3% this year.
"If the conflict between Russia and Ukraine continues this year, Thailand's economic growth rate is likely to be between 2-3%, but inflation will remain around 5% this year," said Tanava, president of UTCC. "This situation will cause Thailand to enter technical stagflation in 2022."
Stagflation is "a combination of stagnation and inflation." This is directly reflected in the economic situation characterized by slow growth and high unemployment (economic stagnation) and rising prices (inflation).
Stagflation is largely related to the 1970s, during which many advanced economies experienced rapid inflation and high unemployment as a result of the oil crisis.
Mr Tanawa insisted that the impact of such estimates was only the result of the Russian-Ukrainian conflict and did not include other headwinds, such as the rapid transmission of the Omicron variant of the new coronavirus.
"Still, it's too early to make such a terrible assumption because the situation remains highly uncertain," he said. "The university is still maintaining Thailand's economic growth forecast at the level of last November, but will wait for a while, and then may make new revisions in April."
Mr. Tanawa said the impact of the Russian-Ukrainian conflict on the global economy is expected to last for 1-3 years, and the consequences are still difficult to predict. "If global crude oil prices soar to $200-300 a barrel, all countries around the world are expected to suffer world economic shocks and economic catastrophes." "Similarly, the Thai economy is expected to shrink this year."
According to Mr Tanawa, a $1 increase in oil prices per barrel would increase domestic retail oil prices by 25 sadang per liter and lead to a 0.3-0.4 percentage point drop in Thailand's GDP.
Given this outlook, Tanawa said the government needs to choose appropriate stimulus measures to prevent an economic slowdown while maintaining the foreign exchange rate at 32.50-33 baht per dollar to ensure Thailand's national competitiveness.
Sanam, president of the Thai Chamber of Commerce, said the business community has been paying close attention to the Russian-Ukrainian conflict, and the situation is currently expected to continue and is unlikely to end in the short term.
He said a sharp rise in global oil prices could weaken Thailand's economic growth prospects in light of Russia's conflict with Ukraine, so the government urgently needed to prepare additional measures, in addition to the recent cuts in excise taxes on diesel and marine oil. The Electricity Authority of Thailand cut power generation to zero to cut electricity bills for six months in response to the impact of oil prices, which are expected to remain high throughout the year.
According to Mr. Sanam, the Thai Chamber of Commerce is monitoring the production costs of certain products affected by rising oil prices, such as cereals, ores and fertilizers.
