The ongoing conflict between Israel and Hamas has far-reaching implications that extend beyond the immediate region. One such impact is on the global trade network, specifically affecting countries like Thailand.
- Ongoing Conflict: The tensions between Israel and Hamas are persistent and likely to be prolonged, impacting Thai exports.
- Export Performance: Thai exports to Israel have significantly decreased in Q1 of 2024, while exports to other Middle Eastern countries like UAE and Qatar remain strong.
- Trade Uncertainty: The conflict has led to increased transportation costs and delayed delivery times due to affected shipping through the Red Sea3.
- Economic Outlook: Despite the conflicts, the global economy is expected to recover steadily, with the IMF projecting a 3.2% growth for 2024.
The Trade Policy and Strategy Office (TPSO) has reported that the ongoing conflict between Israel and the Hamas group remains tense and likely prolonged.
According to the TPSO, Thai exports to Israel in the first quarter of 2024 significantly decreased, while markets in other Middle Eastern countries like the United Arab Emirates and Qatar continue to perform well, reflecting the varying impacts on Thailand’s exports depending on each country’s situation.
The conflict in the Red Sea has impacted shipping, leading to higher transportation costs and delivery delays. Ongoing tensions between Israel and Iran have caused trade uncertainty, although the situation appeared to improve by the end of April.
However the conflict’s direct impact on Thai exports to Israel is projected to be minor, ranging from a decrease of 0.1% to 1.7%. This assessment is based on the assumption that the conflict remains contained and does not escalate to involve other major regional powers. If the conflict were to spread, the repercussions could be more significant, potentially affecting global oil supply and prices, given the Middle East’s substantial contribution to the world’s oil production.
Thai imports and exports in the first quarter of 2024 showed a decline in certain products such as automobiles & equipment, rice, and rubber products. However, other items like canned seafood and computers continue to expand. The import of crude oil and natural gas from the Middle East remains high in demand and value.
The Ministry of Commerce has negotiated with shipping companies to adjust freight charges based on increased costs and implement stepwise increases to help exporters manage costs better. Additionally, negotiations about ‘Free Time’ at ports aim to balance container management.
Despite the potential for prolonged conflicts between Israel, Hamas, and Iran, it is not expected to have a severe impact on the global economy in the long term. The International Monetary Fund projects a 3.2% global economic growth for 2024, indicating a stable recovery. Monitoring the situation and maintaining preparedness in management remain critical ongoing tasks.
Moreover, the situation underscores the importance of monitoring other global events, such as the Russia-Ukraine war and the intensifying US-China rivalry, which also pose risks to the stability of global trade. These events highlight the interconnectedness of the world economy and the need for businesses and investors to remain vigilant about the potential indirect effects of geopolitical conflicts.
