Geopolitical tensions in the Middle East, particularly the ongoing conflict between Israel and Hamas, are significantly impacting the Thai economy. The International Monetary Fund (IMF) has recently revised its GDP forecast for Thailand from 4.4% to 2.7% due to these conflicts, which have led to rising oil prices and shipping blockages that threaten inflation and interest rates in Thailand. Brent crude oil prices rose by 4.8% to US$77.4 per barrel on October 3, 2024, prompting concerns from Deputy Permanent Energy Secretary Veerapat Kiatfuengfoo about the challenges Thailand, a major oil importer, will face from these rising global oil prices [893a65cb].
The Oil Fuel Fund's deficit has decreased to less than 97 billion baht, but the Federation of Thai Industries warns of negative trade impacts, particularly on exports to the Middle East. Shipping costs may rise to US$12,000 per container due to increased freight rates, with 40% of European-Asian trade affected by recent maritime attacks. Despite these challenges, Thailand has sufficient oil stocks to last for two months, which provides some buffer against immediate supply concerns [893a65cb].
The Thai Stock Exchange (SET) index has experienced fluctuations, reaching its lowest point in over three years, as Asian stock markets react to the geopolitical instability. However, Thailand's national oil and gas conglomerate, PTT Plc, has assured that the country has enough oil to meet demand. While Thai exports may be marginally affected, the impact is expected to be minimal due to the limited trade between Thailand and Iran. El Al Airlines, Israel's national airline, continues to operate flights between Tel Aviv, Bangkok, and Phuket, and jet fuel prices have not seen significant increases as a result of the unrest in the Middle East [57d1581a].
The Tourism Authority of Thailand has expressed concerns about the conflict affecting foreign tourism, with 1 million Middle Eastern arrivals expected in Thailand this year. The situation necessitates careful monitoring and strategic adjustments to mitigate the economic impacts of these rising tensions [893a65cb].