In 2020, the estimated total GDP of all ASEAN states amounted to approximately $3.08 trillion, a significant increase from the previous years, reflecting the region’s thriving economy.
POWER IN THE EAST
➡️ ASEAN: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
➡️ Established to facilitate trade and economic growth, as well as promote cultural development and social structures in the region.
➡️ Also provides the collaborating nations with more autonomy and influence on the global economy than they would have had by themselves.
EFFECTS OF THE RUSSIAN-UKRAINE WAR
(statistics based on 2019)
With economic sanctions being levied against Russia in response to its invasion of Ukraine, we can expect some economic fallout to hit ASEAN economies.
1️⃣ Energy Prices
➡️ ASEAN’s direct exposure in this regard is fairly limited.
➡️ Singapore: Imported $38.8 billion of refined petroleum oil, only 5.7% came from Russia.
➡️ Thailand: Crude Oil import of $16.6 billion, only 3.3% from Russia.
➡️ Vietnam: 15% of its coal imports from Russia (most likely, Australia and Indonesia exports will fill the gap).
2️⃣ Food Prices
Here ASEAN countries have more direct exposure.
➡️ Indonesia: Imported $2.05 billion worth of wheat, >25% from Russia and Ukraine. Nearly 50% potassic fertilizer imported from Russia and Belarus.
➡️ The Philippines: Imported $1.45 billion worth of wheat, ~16% came from Russia and Ukraine.
➡️Russia and Ukraine are major providers of semi-finished iron and steel, an important input in the manufacture of cars, machinery and electronics.
➡️Thailand: Sourced 21.4% percent of its semi-finished steel from Russia and Ukraine. Indonesia: 25%, and the Philippines ~50%.
4️⃣ Exit Business Partnerships with Russian Companies
➡️ ASEAN companies may not be so eager to take the write-downs.
➡️ Malaysia: Petronas, along with Gazprom and South Korean and Turkish partners, owns a 15% stake in Iraq’s Badra oil field will not pull out of the JV.
➡️Vietnam: Vietpetro will continue JV with Russia’s Zarubezhneft
Indonesia: Pertamina is developing a major domestic refinery in which Russia’s Rosneft owns a 45% stake.
Most countries in the region don’t have too much direct exposure to Russian energy, but many are likely to experience supply shocks on key manufacturing and agriculture imports. Others are tied up in JVs with Russian companies that would be difficult, if not impossible, to pull out of.
Any way you look at it, the picture is a messy one and we can only hope it will be over as soon as possible.