The enduring conflict between Israel and Hamas bears consequences that extend far beyond their immediate territories, affecting global trade networks, notably impacting countries like Thailand.
Sustained Conflict: The persistent tensions between Israel and Hamas are expected to be prolonged, with implications for Thai exports. Export Trends: Thai exports to Israel experienced a notable decline in the first quarter of 2024, contrasting with strong performances in Middle Eastern markets such as the UAE and Qatar. Trade Challenges: The conflict disrupted shipping routes through the Red Sea, leading to increased transportation costs and delays in deliveries. Economic Forecast: Despite the ongoing conflicts, the global economy is anticipated to recover steadily, as projected by the IMF with a 3.2% growth forecast for 2024. The Trade Policy and Strategy Office (TPSO) has highlighted the enduring and tense nature of the Israel-Hamas conflict and its potential prolonged effects on Thai exports. While exports to Israel notably decreased in Q1 2024, other markets like the UAE and Qatar maintained robust performance, showcasing diverse impacts on Thailand’s exports depending on regional circumstances.
The conflict in the Red Sea region has directly influenced shipping activities, resulting in elevated transportation expenses and shipment delays. Though trade uncertainties arose from the Israel-Hamas tensions, signs of improvement were observed towards the end of April. While the direct impact on Thai exports to Israel is projected to be marginal, ranging from a 0.1% to 1.7% decrease, the situation could escalate if major regional powers become involved. Such escalation could have broader repercussions, potentially affecting global oil supplies and prices, given the Middle East’s significant role in global oil production.
Thai imports and exports in Q1 2024 witnessed declines in specific categories like automobiles & equipment, rice, and rubber products, contrasted by expansions in products like canned seafood and computers. Demand for crude oil and natural gas from the Middle East remains high. The Ministry of Commerce has engaged in negotiations with shipping firms to address increased freight costs, implementing gradual adjustments to assist exporters in managing expenses. Discussions regarding ‘Free Time’ at ports aim to optimize container handling.
While prolonged conflicts between Israel, Hamas, and Iran are likely, their severe impact on the global economy in the long run is not anticipated. The IMF’s 3.2% global economic growth projection for 2024 indicates a steady recovery path. Continual monitoring and readiness in risk management remain crucial ongoing responsibilities.
Furthermore, it emphasizes the significance of monitoring other global developments such as the Russia-Ukraine conflict and escalating US-China tensions, which pose risks to global trade stability. These events underscore the interconnected nature of the world economy, emphasizing the necessity for businesses and investors to remain vigilant about potential indirect consequences of geopolitical conflicts.
