The conflict between the United States, Israel, and Iran has entered its sixth week, leading to negative effects on the global economy, particularly with the closure of the Strait of Hormuz, a vital artery for oil shipping. Experts predict rising production costs due to restrictions on essential materials, increasing pressure on businesses.
The International Energy Agency has warned that the energy crisis may continue until the end of April, with this period expected to be the worst due to the dual decline in oil and liquefied natural gas supplies. Even if the United States decides to end the war in the coming weeks, the commercial sector believes that high oil prices will not drop immediately, forcing companies to seek ways to survive.
Details of the Event
After former US President Donald Trump issued further threats against Iran, Kosak Butrakul, Chief Economist at Bangkok Bank, emphasized the need to closely monitor the situation. He pointed out that Thailand should avoid engaging in the war, as it may face direct consequences from military operations, as has happened with many countries in the Middle East.
Kosak suggested that the Thai government focus on three main areas in its preparation for future crises. First, it should reduce dependence on the United States by cutting exports to 15% and then to 10%. Second, the local economy should be strengthened, turning the crisis into an opportunity, as lower interest rates and a depreciated baht could benefit the export, tourism, and agriculture sectors.
Background & Context
Historically, the Middle East has witnessed numerous conflicts that have impacted the global economy, with the Strait of Hormuz being one of the most important maritime routes for oil transportation. Any disruption in this strait can lead to rising oil prices globally, affecting the economies of oil-importing countries.
Thailand is one of the countries that heavily relies on imported oil, making it vulnerable to price fluctuations. Previous crises, such as the COVID-19 pandemic, have shown how global crises can affect the local economy, necessitating proactive measures.
Impact & Consequences
The current conflict in the Middle East poses a significant structural risk that disrupts global trade and affects Thailand's exports. Denkhorn Kasetruwan, President of the Thai National Shippers Council, confirmed that the country needs unified and clear government support to face these challenges.
Thai companies are seeking to diversify their markets and reduce reliance on traditional shipping methods, as the ongoing war has added 10-20 days to shipping times and increased costs by 20-40%. There are also calls for the establishment of a logistics stabilization fund and to encourage the use of alternative routes.
Regional Significance
Arab countries are significantly affected by the conflict in the Middle East, as many rely on oil as a primary source of revenue. Rising oil prices can lead to increased inflation and affect the purchasing power of citizens.
Under these circumstances, Arab countries must consider diversifying their economies and reducing dependence on oil by investing in renewable energy sources and developing new sectors such as tourism and technology.
In conclusion, the US-Israel-Iran conflict presents a major challenge to the global economy and requires a coordinated response from affected countries to ensure stability and growth amid changing conditions.