Russia’s war in Ukraine is unlikely to have a uniform effect across Southeast Asia, says CLSA’s Anthony Nafte.
Many economies in the region are net importers of oil and are expected to come under “a lot of pressure,” Nafte told CNBC’s “Street Signs Asia” on Wednesday. He noted that recent commodity price spikes have been “much higher” than expected and could be prolonged.
Commodity prices have surged since Russia’s invasion of Ukraine, with oil prices reaching levels not seen since 2008. Russia is a major oil producer while Ukraine is a major exporter of other raw materials such as wheat and corn.
Yet Indonesia could “actually do reasonably well” in the current environment due to its commodity-driven economy, according to Nafte, who is a senior economist at CLSA.
“Over 50% of their exports are from commodities, and now you have a position where your commodity prices are going to stay higher for longer,” Nafte said.
He said, for example, that Russia is currently China’s second-largest coal supplier and disruptions could cause Beijing to look to Indonesia to fill the void.
“Indonesia is going to benefit from the price effect but also in terms of volume,” Nafte said.
Thailand’s economy, on the other hand, is “at the other extreme”, he said.
Current conditions present continued headwinds for exports and tourism, Thailand’s main economic drivers, “for the rest of the year“, the economist said.
“This disruption in global trade will be a big headwind for exports,” he said. “In terms of reviving tourism, I think 2022 is too early. There will still be a lot of problems.”
Thailand’s balance of payments also faces the “greatest vulnerability” among emerging economies in Southeast Asia, he added.
“They had a big current account deficit last year because of this loss of tourism revenue, and their exchange rate looks particularly vulnerable,” Nafte said.