An official visit by the Russian Prime Minister Dmitry Medvedev to Thailand on April 7-8, 2015, marked the first such occurrence in 25 years. Since Russia is a market with good potential for trade and tourism, this visit should help improve bilateral trade.
Eroding consumer purchasing power in Russia – as a result of economic and political problems – has crimped the number of Russian tourist arrivals to Thailand since late 2014. In addition, our exports to Russia contracted 51.3 percent YoY during 2M15. However, several Thai export categories exhibit bright prospects in Russia, including agricultural and food products, thanks to strong demand there to compensate for a shortfall in such imports from the European Union (EU) due to sanctions against Russia, plus efforts by Thailand and Russia to promote sustainable export growth between the two countries.
Several Thai industrial export categories sent to Russia have been able to maintain growth due to continuing demand from businesses there. They include air conditioners/parts, machinery/parts, microwave ovens, refrigerators, refrigeration compressors, aircraft parts, timber and wood products. However, our high-end exports, e.g., automobiles/auto-parts, gems/jewelry, stand high risk of contraction.
Thus, we at KResearch expect that Thai shipments to Russia may contract by more than 20 percent during 2015 due to their domestic economic problems and the depreciating Ruble that pressure consumer purchasing power there. A bilateral economic cooperation agreement signed during the Russian Premier's visit may help bolster many Thai exports, notably agricultural and food products over the remainder of 2015, thus supporting Thai shipments to resume growth in 2016.
KResearch projects that the Russian economy will shrink perhaps 4 percent during 2015 in concert with Dubai crude oil prices that may average only USD57-65/barrel. The weakening Ruble that makes travel expenses less affordable for Russian tourists will also likely hurt Thai tourism. We expect that the number of Russian holidaymakers coming here will continue to decline this year.