Industry Horizon (April 2022)

War in Ukraine, tougher sanctions, and more retaliatory measures increase concerns over inflation and economic growth, raised risk of global stagflation

The impact of the Ukraine war on Thai industrial outlook depending on the severity and duration of sanctions and war

 

Russia-Ukraine crisis could hurt economic and industrial outlook via four main channels: trade & logistics, energy security, prices & inflation, and income effect & capital markets

 

Limited direct impact via trade channel but indirect impact could be significant; war in Ukraine is pressuring global energy security

 

Rising inflation would hurt purchasing power and slow consumption recovery; negative income effect and high market volatility would also hurt trade and tourism

 

Among emerging economies, Thailand depends heavily on oil imports and the war will translate to be upward pressure on production cost for industries especially energy-reliant sectors

 

Construction is the top loser, followed by transportation due to higher costs; top gainers are oil & gas, sugar and textiles due to price hikes and trade diversion

 

Construction Contractor: Coming under pressure from the rising costs of construction materials and transportation, amplifying problems with labor shortages

 

Road Transport: Facing high fuel cost and weakened demand on slower-than-expected economy

 

Sea freight services: Freight rates remaining elevated all year round

 

Housing in BMR: Rising construction costs and slow demand recovery putting pressure on margins

 

Problems with chip shortages extended by the Russia-Ukraine war

 

Automobile: Chip shortages undershooting earlier output predictions

 

Agriculture: Crops affected by the rising cost of fertilizer and energy including oil palm, tea and coffee, fruits, sugarcane, and paddy; Poultry, swine and other livestock, and fish becoming more expensive with the higher cost of feed

 

Agriculture: The rising cost of feed and fertilizer pushing up prices broadly, but beginning to ease in 2H22 on upcoming additional outputs

 

Hotel: Russia-Ukraine war dragging on recovery especially in European and Russian markets 

 

Refinery: Expected increase in gross refinery margins improving business conditions