Asia winners and losers in Russia-Ukraine war: commodities, weapons
Since the Russia-Ukraine War began, global grain prices have risen. Russia and Ukraine contribute significant amounts to some of these commodities.
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A new report by Economic Intelligence Unit suggests that the Russia-Ukraine War could impact Asia-Pacific countries in all aspects, from food prices to weapons supplies to tourism.
The war affects food prices in particular because Russia and China are both major commodities producers. Certain Asian countries are dependent on Russia’s fertilizer, which is why they rely so heavily on it. global shortage is already driving up prices of agriculture and grains.
Given the region’s relatively high levels of dependence on energy and agricultural commodity imports – even if countries don’t source directly from Russia or Ukraine, the spike in prices will be concerning, warned the EIU.
According to the company, “Niche dependencies” include dependence on Russia or Ukraine for fertilisers and grains in South-east Asia and South Asia. This could disrupt the agriculture sector.
Russia has been hit with broad-ranging sanctions by the world’s largest powers for its unprovoked aggression on Ukraine. Energy sanctions have been imposed by the U.S., with no mention of Russia. U.K. plans to do so by the end of the year. The European Union is currently considering whether they will do the same.
The country has also received sanctions oligarchs, banks, state enterprises•…
“North-east Asia — home to the world’s leading chipmakers — also has some exposure to any disruption in the supply of rare gases used in semiconductor production,” EIU said in its report.
Another area that could be affected is Russia’s preference to avoid tourists, and the possibility of some countries in Asia-Pacific being cut off from Russian arms.
Since the start of war in February, global prices for oil and gas have risen already.
Russia and Ukraine make up a substantial portion of the supply in some of those commodities.
While some countries may be affected by the price rise, others could benefit.
EIU stated that there will be benefits to exports for certain countries due to higher commodity prices, as well as a global search of alternative supplies.
The impact on food supply and energy has not only been devastating, but also nickel supplies. Russia is third in world nickel suppliers.
Higher commodity prices will be a boon for countries:
- Australia, Indonesia and Mongolia are coal exporters
- Crude oil exporters: Malaysia, Brunei
- Liquefied natural gas: Australia, Malaysia, Papua New Guinea
- Nickel suppliers: Indonesia, New Caledonia
- Australia, India: Wheat Suppliers
The countries most at risk of rising prices are Russia/Ukraine (as a proportion of global imports in 2020)
- Fertilizer: Indonesia, Vietnam, Thailand, Thailand, more than 10% Thailand, Malaysia, Malaysia (about 10%), India (10%) More than 66% Bangladesh (nearly 5%) Myanmar (33%), Sri Lanka (2%)
- Russia Cereals: Pakistan (about 40), Sri Lanka (30), Bangladesh (20), Vietnam (10), Vietnam (10), Thailand (5), Philippines (6), Philippines (8), Philippines (9), Thailand (4), Philippines (3), Philippines (25) and Indonesia (1,05%), Myanmar (0,05%), Malaysia (6,05%).
- Cereals from Ukraine: Pakistan, Indonesia (more that 20%), Bangladesh (more then 20%), Thailand (more about 10%), Myanmar (more over 10%), Sri Lankan (nearly 10%) and Vietnam (less than 5%) respectively. Malaysia (about 5-5%).
Russia is second in the list of world arms suppliers. The EIU noted that Russia has provided major weaponry supplies to China, India, and Vietnam for the last two decades.
According to the research firm, “International sanctions against Russian defence companies will prevent the future acces of Asian countries for these arms.”
According to the report, however, this could also open up new markets for domestic as well as foreign producers.
The countries that are most dependent on Russian arms imports, from 2000 to 2020, listed by their percentage of total imports
- Mongolia (about 100%); Vietnam (more then 80%); China (nearly 88%); India (more about 60%); Laos (40%), Myanmar (40%), Malaysia (20%), Indonesia (20%), Malaysia (30%), Myanmar (40%), Laos (40%), Laos (40%), Myanmar (40%), Malaysia (50%), Indonesia (16%), Malaysia (120%), Indonesia (150%), Bangladesh (10%), Nepal (10%), Pakistan (9%)
The EIU stated that while Russia has access to Asia’s air routes, it is not possible for tourists from China to visit.
According to the research company, “Tourism represents the largest potential exposure in services trade.”
It stated that the economic disruptions, depreciation of the roubles and withdrawal from Russia of international payments services would likely affect Russians’ willingness to travel.
SWIFT has been closed to several Russian banks. It is an international system which connects over 11,000 members banks in more than 200 countries.
Meanwhile, the ruble initially dived nearly 30% against the dollarThe war started. Although the currency recovered, it was trading at 10% less than its start in the year. That hurt ordinary Russians’ wallets.
However, Asia’s reliance on Russian tourists remains low.
The EIU reported that Thailand was the most beneficiary region-wide in 2019, having received 1.4million Russian visitors. However, it accounted for less than 4 percent of the total number of visitors that year. The second place was Vietnam, followed by Sri Lanka, Maldives, and Indonesia.
According to the EIU, “Without conflict however, Russian tourist could have grown in importance due to ongoing Chinese travel restrictions.”