Large oil importers like India and Thailand will be the most affected among Asia-Pacific countries by the ongoing Russia-Ukraine war, S&P Global Ratings has said.
S&P estimates the Indian economy to grow 7.8% in the next fiscal year beginning April 1, 2022. Besides, the economy is expected to grow 6% and 6.5% in 2023-24 and 2024-25, respectively. It projected inflation at 5.4% in the current fiscal year.
It said banks in Asia-Pacific (APAC) region have small direct exposure to Russia which will soften the impact of the conflict, but proximate downside risks — in particular, actual and potential secondary economic and other risks — lie ahead.
“The biggest risk of the Ukraine conflict is market volatility and higher commodity prices; emerging economies with large energy imports are most at risk,” S&P said in a report.
India relies on overseas purchases to meet about 85% of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.
International oil prices had climbed to a 14-year high of near $140 per barrel last week on fears of supply disruption following Russia’s invasion of Ukraine beginning February 24. Rates have since eased to around $100 per barrel.
“India and Thailand are large oil importers and will be the most affected among large Asia-Pacific countries,” S&P said.
