Global prices for some grains have skyrocketed since the Russo-Ukrainian war began, with both countries contributing a significant proportion of the world’s supply of certain commodities such as rice. noodles.
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From food prices to tourism and arms supplies, Asia-Pacific countries could be hit hard by the Russia-Ukraine war, even if they aren’t directly involved in the conflict, according to a report. new from the Economic Intelligence Unit.
Food prices are particularly sensitive to war because both countries are important producers of the commodity, according to the research firm. Some Asian countries depend on commodities such as fertilizers from Russia, and Global shortages have been driving up prices of agricultural products and grains.
Given the region’s relatively high reliance on energy and agricultural goods imports, the EIU warns – even if countries don’t import directly from Russia or Ukraine, prices will skyrocket, the EIU warns newspaper.
“Most reliance includes reliance on Russia and Ukraine as a source of fertilizer and grain in Southeast Asia and South Asia, which could cause disruption in the agricultural sector,” the company said. Karma”.
World powers have dealt a blow to Russia with wide-ranging sanctions over Russia’s gratuitous war with Ukraine. The United States has imposed sanctions on energy, while The UK plans to do so by the end of the year. The European Union is also considering whether to do the same.
Sanctions have also been imposed on the country oligarchs, banks, state-owned enterprisesand sovereign bonds.
“Northeast Asia – home to the world’s top chipmakers – is also at risk of disrupted supplies of rare gases used in semiconductor production,” the EIU said in its report.
Other regions that could be affected include Russian tourists who prefer to stay away, as well as some Asia-Pacific countries that could have Russian arms cut.
Global oil, gas and grain prices have skyrocketed since the war began in late February.
Russia and Ukraine contribute a significant proportion of the world’s supply for some of those commodities.
Some countries will be vulnerable to price increases, but others could benefit.
“There will be export benefits for some countries from higher commodity prices and the search for alternative sourcing globally,” the EIU said.
Besides food and energy, nickel supplies are also affected as Russia is the world’s third-largest supplier of nickel.
Countries that will benefit from higher commodity prices:
- Coal exporters: Australia, Indonesia, Mongolia
- Crude oil exporters: Malaysia, Brunei
- Liquefied natural gas: Australia, Malaysia, Papua New Guinea
- Nickel supplier: Indonesia, New Caledonia
- Wheat supplier: Australia, India
Countries most vulnerable to rising prices (imports from Russia/Ukraine as a percentage of world imports in 2020):
- Fertilizers: Indonesia (more than 15%), Vietnam (more than 10%), Thailand (more than 10%), Malaysia (about 10%), India (more than 6%), Bangladesh (nearly 5%), Myanmar ( about 3%), Sri Lanka (about 2%)
- Grains from Russia: Pakistan (about 40%), Sri Lanka (more than 30%), Bangladesh (more than 20%), Vietnam (nearly 10%), Thailand (about 5%), Philippines (about 5%), Indonesia (under 5%), Myanmar (under 5%), Malaysia (under 5%)
- Grains from Ukraine: Pakistan (nearly 40%), Indonesia (more than 20%), Bangladesh (nearly 20%), Thailand (more than 10%), Myanmar (more than 10%), Sri Lanka (nearly 10%), Vietnam South (less than 5%), Philippines (about 5%), Malaysia (about 5%)
Russia is the second largest arms supplier in the world. The EIU points out that it has been the main source of arms supplies to China, India and Vietnam over the past two decades.
“International sanctions against Russian defense companies will hinder the access of Asian countries to these weapons in the future,” the research firm said.
However, that will also create new opportunities for manufacturers from other countries, as well as domestic ones, the report said.
Countries most dependent on Russian arms imports from 2000-2020, ranked by share of total imports
- Mongolia (about 100%), Vietnam (more than 80%), China (nearly 80%), India (more than 60%), Laos (more than 40%), Myanmar (about 40%), Malaysia (more than 20 %), Indonesia (more than 10%), Bangladesh (more than 10%), Nepal (more than 10%), Pakistan (less than 10%)
While Asia’s air routes remain open to Russian airlines, tourists from the country may not be visiting, the EIU pointed out.
“Tourism is the main potential for trade in services, and with Asian routes still open to Russian airlines, unlike in Europe, such trade could continue,” the research firm said. continuous (and scalable),” the research firm said.
“However, Russians’ willingness to travel is likely to be affected by economic disruptions, the devaluation of the ruble and the withdrawal of international payment services from Russia,” it added.
Several Russian banks have also been excluded from SWIFT, a global system that connects more than 11,000 member banks in about 200 countries and territories around the globe.
While, the original ruble fell by almost 30% against the dollar when the war started. Since then, the coin has rebounded, but last trading was about 10% lower than it was at the beginning of the year, hurting the wallets of ordinary Russians.
However, dependence on Russian tourists remains low in Asia.
Thailand was the biggest beneficiary in the region in 2019, welcoming 1.4 million Russian tourists, according to the EIU. However, that number accounted for less than 4% of total arrivals that year. Vietnam came in second, while Indonesia, Sri Lanka and the Maldives made it into the top five Asian destinations for Russian tourists.
“Without the conflict, Russian tourism could increase in importance, given the ongoing restrictions on Chinese tourists’ exit,” the EIU said.