Thailand is facing the risk of stagflation if the Russia-Ukraine crisis continues throughout this year, according to the University of the Thai Chamber of Commerce (UTCC).
Thanavath Phonvichai, president of the UTCC, warned on Wednesday that if the Russia-Ukraine crisis continues throughout 2022, Thailand’s headline inflation would reach 5 percent, putting the country in stagflation following a rapid increase in prices.
UTCC takes a look at the possible outcomes for the Thai economy from the Russia’s invasion of Ukraine:
In the first scenario (if the conflict is settled within three months), the Thai economy will suffer a loss of around THB73.4 billion, resulting in a 0.5 percent decline in GDP or a drop to 3.7 percent in 2022, while inflation slows at 3.0-3.5 percent.
In the second scenario (if the conflict is settled within six months), the Thai economy will suffer a loss of around THB146.8 billion, resulting in a 0.9 percent decline in GDP or a drop to 3.3 percent in 2022, while inflation slows at 3.5-4.5 percent.
In the worst-case scenario (if the conflict continues throughout 2022), the Thai economy will suffer a loss of around THB244.7 billion, resulting in a 1.5 percent decline in GDP or a drop to 2.7 percent in 2022, while inflation slows at 4.5-5.5 percent.
However, it is too early to make conclusions about the impact since the situation remains unpredictable, and UTCC will maintain its previous forecast of 4.2 percent growth for Thailand this year. UTCC will monitor the situation closely and update the outlook forecast again in April.
