Selangor Journal
People fleeing Russian invasion of Ukraine arrive at a temporary camp in Przemysl, Poland, on February 28, 2022. — Picture by REUTERS

Moody’s Analytics: Apac to face moderate distruptions as trade with Ukraine limited

KUALA LUMPUR, March 1 — Moody’s Analytics believes that Asia Pacific (Apac) will experience a moderate impact on inflation and supply chain disruptions as direct trade between Ukraine and the region is limited.

It said Ukraine is not an exporter of energy to the region.

“The (Russia-Ukraine) conflict contributes only indirectly to higher energy prices either via blockages of shipments from Russia and by the risk premium now priced into global crude oil and other energy products.

“Food-price inflation could stay higher for longer due to high energy prices or due to the disruption of shipments of wheat, corn, or seed oils,” it said in a report released today.

Moody’s Analytics said it expects a modest impact from any disruptions of exports from the Apac region destined for Ukraine.

The research firm said semiconductors and integrated circuits are the largest single export item from China and the Philippines to Ukraine.

Cars and trucks are the largest commodities shipped from Japan, Korea, and Thailand to Ukraine, and broadcasting equipment is Hong Kong’s largest export item and India’s second-largest to Ukraine, it added.

According to the report, basic commodities also represent the largest export to Ukraine from Indonesia (palm oil and nickel ore), Malaysia (vegetable and palm oil), Australia (coal briquettes), and New Zealand (seafood).

“Ukraine also supplies speciality gases required by the chip-making industry.

“Thus, there is potential to extend the stress in the supply chain of semiconductors, which are key to manufacturing automotive and other electronic equipment in APAC,” said Moody’s Analytics.

Overall, imports into the APAC region from Ukraine matter more, but the flow in both directions is small, it said.

“With the size of Ukraine’s economy just seven per cent that of Russia’s, the trade flows are smaller.

“Exports to Ukraine from the region amount to only about 0.1 per cent of exports in Vietnam and Hong Kong, and less elsewhere in the region,” it said.

— Bernama

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