The last quarter of the year “should have been” a year of happy celebration as it would be the first care- free celebration without pandemic. However, it was overshadowed by the cloud of anxiety. Comparing it to the Russia-Ukraine conflict, the war between Israel and Hamas seems to be a cause for greater concern, both politically and economically.
In Thailand, the delayed government formation this year has resulted in economic stimulus budgets not being implemented in time. The measures taken so far have focused on cost-of-living relief, such as reducing fuel and utility costs, and a digital cash handout of 10,000 baht, which might not come to fruition because it has more costs than benefits. One of the more interesting policies proposed by the new government is the Landbridge project, a long-term strategy aimed at promoting the country’s development.
Regarding the potential impact of the war in the next 3-6 months, it’s crucial to maintain one’s normal life in such uncertain times. The first thing to preserve is one’s mental health because most war-related news is quite depressing, and protecting yourself from hearing this news can protect one’s emotional state.
At this point, the basic economic impact we can expect is that global interest rates, including those in Thailand, are likely to stay high for the next year or so because global inflation shows no sign of going down. Furthermore, the prices of oil and commodities are increasing.
The United States’ strategic petroleum reserves are currently at lower levels (as of October). Consequently, there might be a need to stockpile crude oil. But the reduced supply from the war could result in a higher expense burden for businesses or individuals with debt tied to floating interest rates. It is important to plan and manage these costs effectively.
This is a time to monitor the flow of money closely. It may shift from one asset to another, and some assets may become undervalued. One notable trend in the early stages of the new conflict is the rising price of gold, with the potential to reach $2,000 per ounce, as gold is considered a hedge against inflation. Deeply discounted bond prices may present opportunities when interest rates begin to decrease.
Nobody wishes for war, but without breakdowns, there can be no recovery or growth. War is one of the many challenges, be it trade wars, currency wars, or business wars. It’s better to maintain your resilience in every way possible.
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