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Fuel and transportation
costs across the
region could increase
dramatically.

Nomura warns of impact on Asian countries

following Russian invasion of Ukraine

PERFORMANCE IN the wake of Russian forces invading Ukraine, in a vote that ultimately led to just the 11th emer-
analysts at Japan’s Nomura Holdings have high- gency session of the UN General Assembly in the
lighted a trio of Asian countries most likely to past 72 years.
suffer from increased utility and fuel prices. They Thailand and the Philippines, although pre-
also face subsequent risks of runaway inflation dicted to suffer less than India, are also likely to
rates and currency wobbles if the conflict is not be hit. “(We) also see risk to corporate profit mar-
resolved quickly. gins, as the entire input cost burden is unlikely to
India, the Philippines and, to a slightly lesser be passed on to consumers,” Nomura added.
extent, Thailand are the countries forecast to According to the forecasts, a 10% rise in
suffer the most in Asia should the international global oil prices could add almost half of one per-
community and Ukrainian authorities prove centage point to inflation in both the Philippines
incapable of ending the conflict in the near and India, with an increase of 0.3% in the rate of
future. inflation for Thailand should that level of crude
With rising oil prices the most immediate and price growth be sustained.
obvious result of Russian aggression, countries If this happens, fuel and transportation costs
around Asia are focusing on prices at the pump across the subcontinent and two Southeast Asian
and any resulting impact this may have on food countries could increase dramatically. In the case of
prices and transportation costs in the world’s India alone is home to the world’s second bus-
most populated continent. iest rail network after Japan, and 37mn scooters. the Philippines,
Inflation too is seen as a real and present dan- An increase in utility costs in all three coun-
ger, particularly in India and the Philippines, as is tries would only add to problems set in motion growth
a resulting threat to the currencies of each of the by a war in Europe. This would especially be
countries highlighted by Nomura. the case in India, where compressed natural predictions are
“Most Asian consumers have not yet fully gas (CNG) and piped natural gas (PNG) supply now set to do an
recovered from the pandemic, and have lower costs had been expected to double in April even
savings, so higher inflation can squeeze real prior to the invasion. about-turn.
disposable incomes and weaken the incipient In the case of the Philippines, growth predic-
consumption recovery”, the Nomura report said. tions are now set to do an about-turn.
In turn, if realised over the coming days and Just two weeks ago, Nomura had raised the
weeks, a worst-case scenario could even see a Philippines’ 2022 growth forecast from 6.5%
slowing of economic growth across southern to 6.8%, albeit with caveats centred around the
Asia, the financial services firm warned. ongoing coronavirus (COVID-19) pandemic
India in particular has proved highly suscep- and potential political instability following
tible to oil market volatility in the past year, and upcoming presidential elections in early May.
just last week drew flak from around the globe In recent days, however, the Philippine Star
for abstaining at a United Nations Security newspaper has now called the country’s econ-
Council vote condemning Russia for its invasion omy “understandably jittery” as “politicians
of Ukraine. eyeing a position in the next administration are
This was followed up by a second abstention already calling for action”.™

P8 www. NEWSBASE .com Week 09 04•March•2022