By Jaxon Holt, South East Asia Correspondent
In the face of escalating global tensions, Thailand’s economy could face significant volatility in the coming year, according to Danucha Pichayanan, secretary-general of the National Economic and Social Development Council (NESDC). Drawing on recent international developments, including the ousting of Syrian President Bashar al-Assad and ongoing disputes in the Taiwan Strait and Ukraine, Pichayanan highlights potential disruptions to fuel markets, trade routes and manufacturing supply chains. While these scenarios may offer opportunities for peace and stabilisation, they equally risk exacerbating economic uncertainty, underscoring the interconnectedness of global geopolitics and Thailand’s economic health.
The Middle East Powder Keg: Implications for Fuel Prices
The sudden ousting of Bashar al-Assad by rebel forces in Syria last month has set the stage for potential internal restructuring, which Pichayanan suggests could lead to peace efforts with Israel. If successful, such developments might ease longstanding conflicts in the Middle East, potentially stabilising the volatile global fuel market and providing relief for oil-importing nations like Thailand. However, the secretary-general cautioned that the situation remains precarious; a flare-up could disrupt key transport routes, such as the Strait of Hormuz, sending fuel prices soaring and impacting Thailand’s energy costs. 
Thailand, heavily reliant on imported oil for its industrial and transport sectors, could see inflation rise if fuel prices increase. According to data from the International Energy Agency, Thailand imported approximately 1.2 million barrels of crude oil daily in 2024, making it vulnerable to global supply shocks. Analysts from the World Bank have noted that a 10% spike in oil prices could reduce Thailand’s GDP growth by up to 0.5%, affecting everything from consumer spending to export competitiveness. Yet, these projections are speculative and depend on myriad factors, including diplomatic negotiations. No evidence currently confirms an imminent closure of the Strait of Hormuz, and experts emphasise that peace talks, if they materialise, may take years to yield tangible results.
In this context, the Thai government has been proactive in diversifying energy sources, with initiatives like the promotion of biofuels and renewable energy. The Ministry of Energy’s recent policy documents outline plans to increase renewable energy’s share in the national mix to 30% by 2030, which could mitigate some risks. Still, as Pichayanan pointed out, the global fuel market’s interconnectedness means that even distant conflicts can have immediate repercussions for Thailand’s economy.
Rising Tensions in the Taiwan Strait: Threats to Global Trade and Manufacturing
Another focal point for Pichayanan is the simmering tensions between China and Taiwan, which he warns could disrupt global trade networks. Taiwan’s position as the world’s leading chip manufacturer places it at the heart of the global supply chain for electronics and automobiles. If escalations lead to blockades or military actions, production could halt, causing ripple effects across industries worldwide, including Thailand’s manufacturing sector.
For instance, Thailand’s automotive industry, a key driver of economic growth, relies heavily on Taiwanese semiconductors for vehicle electronics. In 2024, Thailand exported over 1 million vehicles, many incorporating components from Taiwan. Should supply chains be interrupted, Thai factories might face delays, potentially leading to job losses and reduced export revenues. Economic models from the Asian Development Bank suggest that a prolonged disruption in chip supplies could shrink Thailand’s manufacturing output by as much as 15%, with broader implications for employment and inflation.
It is important to note that these risks are conditional; no concrete evidence indicates an immediate conflict, and diplomatic channels remain open. US officials, including statements from the State Department, have reiterated commitments to Taiwan’s defence while advocating for peaceful resolutions. Social media sentiment, as observed on platforms like X (formerly Twitter), shows a mix of concern and optimism, with users from @ASEANEconomicWatch highlighting potential diversification strategies for Southeast Asian economies. However, such posts represent public opinion rather than verified data, and their influence on policy should be viewed cautiously.
Thailand’s response has included bolstering domestic capabilities, such as the Eastern Economic Corridor initiative, which aims to attract high-tech investments and reduce dependency on foreign suppliers. If tensions ease, as some analysts predict under ongoing international pressure, Thailand could emerge stronger by capitalising on regional trade agreements like the RCEP (Regional Comprehensive Economic Partnership).
The Russia-Ukraine Standoff: Uncertainty Under a New US Administration
Pichayanan also turned his attention to the Russia-Ukraine conflict, suggesting that the incoming US administration under President-elect Donald Trump might pave the way for de-escalation. Trump’s campaign promises of swift negotiations could lead to a reduction in hostilities, potentially alleviating pressures on global food and energy markets. However, the secretary-general highlighted the wildcard factor: outgoing President Joe Biden’s potential decision to authorise significant weapon shipments to Ukraine before leaving office.
Such actions, if they occur, may prolong the war, with knock-on effects for Thailand and the global economy. Ukraine is a major exporter of agricultural products, and any extension of the conflict could drive up food prices, affecting Thailand’s import costs for grains and affecting domestic inflation. The World Trade Organization’s reports indicate that Thailand imported around 10 million tonnes of wheat in 2024, much of it from regions indirectly impacted by the war.
Yet, these predictions remain speculative. As of early January 2025, no official announcements from the Biden administration confirm large-scale weapon shipments, and Trump’s team has not detailed specific peace plans. Experts from think tanks like the International Institute for Strategic Studies caution that negotiations could falter, leading to prolonged instability. In Thailand, this uncertainty has prompted the NESDC to recommend diversified trade partnerships and stockpiling essential commodities as a precautionary measure.
From a broader perspective, these global conflicts illustrate the vulnerabilities of small, open economies like Thailand’s. While the country has demonstrated resilience through past crises, such as the COVID-19 pandemic, sustained geopolitical risks could challenge its projected 3-4% GDP growth for 2025. Policymakers must balance immediate responses with long-term strategies, including enhancing regional cooperation through ASEAN frameworks.
In-Depth Analysis: Navigating Geopolitical Risks for Economic Stability
The insights from Pichayanan underscore a critical juncture for Thailand’s economic strategy. Geopolitical events, while beyond direct control, demand adaptive policies to safeguard growth. For instance, the potential easing of the Russia-Ukraine conflict might lower global commodity prices, benefiting Thailand’s consumers and exporters. Conversely, if Middle East tensions escalate, Thailand could face higher energy costs, necessitating fiscal measures like subsidies or tax adjustments.
Experts from the Bank of Thailand and international bodies like the IMF emphasise the need for scenario planning. If reforms in Syria lead to peace, as Pichayanan anticipates, Thailand might see opportunities in stabilised fuel markets. However, estimates of economic impacts remain unconfirmed and should be treated as hypothetical. No adverse inferences are drawn here regarding the intentions of involved parties; all analysis is based on publicly available data and conditional on verified developments.
Ultimately, Thailand’s economic future hinges on a combination of global diplomacy and domestic innovation. By fostering resilience through education, technology investment and sustainable practices, the nation can mitigate these risks and maintain its role as a Southeast Asian economic powerhouse.
