In a comprehensive analysis conducted by the International Trade Promotion Office of Thailand based in Tel Aviv, the repercussions of renewed hostilities in the Middle East were examined.
Somewhat surprisingly, the report highlighted an unanticipated advantage of the conflict for Thailand: a potential surge in food and medical exports. The escalating conflict has resulted in amplified demand for these commodities, giving Thailand a unique chance to augment exports. Noteworthy products in demand involve essential staples such as rice, seafood, along with canned and processed food items, in addition to health commodities like pharmaceuticals, medical equipment, and natural rubber products.
The Trade Office also projected a surge in the demand for auto parts and vehicles in the post-war landscape. However, a decline in the demand for luxury goods like ornaments and jewellery is expected to persist for some time.
Shining a light on the negative impacts of a protracted war, the Office pointed towards rising shipment charges and delays in the transport of goods that Thailand imports from Israel, such as diamonds, chemical products, and fertilisers.
Moreover, even with the potential increase in demand for Thai products, Israeli consumers are expected to cease purchasing items that are not essential for everyday life, ranging from automobile and parts to jewellery and ornaments, as mentioned in the report.
Another ramification of the continuing conflict could be that Israeli tourists and businesses, who form a significant contingent, might revoke their plans to visit Thailand if the conflict extends till next year.
Citing estimates from the Finance Ministry of Israel, the report warned that the ongoing hostilities with Hamas could financially strain the nation, costing “billions of shekels” (an Israeli shekel is 9 baht), and potentially inducing an economic downturn.
Increased military expenditure coupled with a drop in tourism revenue can contribute towards mounting inflation, higher fuel prices, and soaring consumer expenses in the coming quarter or half-year, as per the forecast by Israeli economists.
Moreover, the detriments of the ongoing conflict could reduce Israel’s GDP by a noteworthy 1.5%, equivalent to 27 billion shekels (243.8 billion baht). This could lead to a decrease in economic growth from the projected 3% to an adjusted estimate of 2.2%
The Thai Trade Office also posited that the Israel-Hamas conflict could impact Thailand-Israel trade in three distinct phases.
In the immediate future, if the hostilities settle by November, Thailand could witness a sharp decline in trade due to the impending recession in the Israeli economy.
Conversely, in the mid-term (if the war concludes between December and February), the succeeding three-month span post-war might witness a revival in trade due to Israel’s recovery phase.
Ultimately, in the long run, as Israel recovers from the impact of war, an increase in trade volume is expected for Thailand.
“Owing to a robust economy powered by modern technology, Israel is expected to rebound swiftly post-war if the conflict ends soon”, the report optimistically concluded.
In recent years, Thailand has seen a positive trend in exports to Israel with a striking 41% increase in 2021 compared to the previous year, accompanied by a 14% growth last year, and a 12.6% hike in the initial eight months of this year.