The Ukraine war will have varying impacts on Asian countries, with some being hit harder than others, according to a new study.

• The EIU stated that the increase in energy and agricultural commodity import prices, even if not sourced directly from Russia or Ukraine, would be a cause for concern in regions that are highly dependent on these imports.
• Over the past two decades, China, India, and Vietnam have relied heavily on Russia as a supplier of weapons, according to the EIU.
• In other areas of vulnerability, Russian tourists may stay away.

The Russia-Ukraine war could negatively impact Asia-Pacific countries, even if they are not directly involved, as seen in the report by the Economic Intelligence Unit, which covers topics such as food prices, tourism, and weapons supply.

The war has made food prices more volatile due to the significant commodity production of both countries, according to a research firm. Asian countries, in particular, are affected as they rely on Russian fertilizer, which is driving up the prices of agriculture and grains.

The EIU warned that the spike in energy and agricultural commodity prices, even if not sourced directly from Russia or Ukraine, will be concerning due to the region's high dependence on imports.

The agricultural sector in South-east and South Asia is dependent on Russia and Ukraine for fertilizer and grain, which could cause disruptions if these countries were to cease their supply.

Russia is facing sanctions from major global powers, including the U.S., U.K., and EU, due to its unprovoked war on Ukraine.

The country's oligarchs, banks, state enterprises, and sovereign bonds have also been subjected to sanctions.

The report from EIU stated that North-east Asia, which hosts the world's top chip manufacturers, is also vulnerable to any disruptions in the supply of rare gases used in semiconductor production.

Some Asia-Pacific countries may be cut off from Russian weapons, while Russian tourists may prefer to avoid visiting those countries.

Winners and losers from commodity spikes

Since the war began in late February, the cost of oil, gas, and grains has increased worldwide.

Some of the world's supply for certain commodities comes from a substantial percentage of Russia and Ukraine.

Although gains have been pared down from the initial spike, the company is still up 65% compared to a year ago. Similarly, the company has experienced an increase of over 40% in the same period.

While some countries may be susceptible to the price increase, others may gain from it.

According to EIU, some countries will experience export benefits due to the rise in commodity prices and the global search for alternative supply.

Nickel supply has also been affected due to Russia being the world's third-largest supplier of the metal.

Countries that will benefit from higher commodity prices:

• Coal exporters: Australia, Indonesia, Mongolia
• Crude oil exporters: Malaysia, Brunei
• Liquefied natural gas: Australia, Malaysia, Papua New Guinea
• Nickel suppliers: Indonesia, New Caledonia
• Wheat suppliers: Australia, India

The countries that are most vulnerable to rising prices due to their imports from Russia and Ukraine as a percentage of their 2020 world imports.

• More than 15% of fertilizer usage occurs in Indonesia, while Vietnam and Thailand also use more than 10%. Malaysia uses approximately 10%, and India and Bangladesh use more than 6% and nearly 5%, respectively. Myanmar and Sri Lanka use about 3% and 2%, respectively.
• More than 40% of cereals in Pakistan come from Russia, while Sri Lanka imports more than 30%. Bangladesh, Vietnam, Thailand, the Philippines, Indonesia, Myanmar, Malaysia, and Russia also contribute to the cereal market in these countries.
• Nearly 40% of cereals in Pakistan come from Ukraine, while more than 20% come from Indonesia and nearly 20% from Bangladesh. Thailand, Myanmar, Sri Lanka, Vietnam, Philippines, and Malaysia also import cereals from Ukraine, with more than 10% coming from the country.

Russian arms

Over the past two decades, Russia has been a major source of weaponry for China, India, and Vietnam, as stated by the EIU.

The research firm stated that the international sanctions on Russian defense firms would hinder the future acquisition of arms by Asian countries.

The report stated that new opportunities will arise for manufacturers from various countries, including domestic producers.

The top countries that are most reliant on Russian arms imports from 2000 to 2020, ranked by the percentage of their total imports.

• Over 100% of Mongolia's population is vaccinated, while more than 80% of Vietnam and China's populations have received vaccines. India, Laos, Myanmar, Malaysia, Indonesia, Bangladesh, Nepal, and Pakistan all have vaccination rates above 20%.

Loss of Russian tourists

The EIU noted that although Asia's air routes remain open to Russian airlines, tourists from the country may not travel there.

The research firm stated that tourism is the primary source of exposure within services trade, and since Asian air routes remain open to Russian airlines, unlike those in Europe, such trade could continue and potentially expand.

The willingness of Russians to travel may be impacted by economic disruption, currency depreciation, and the withdrawal of international payment services from Russia.

SWIFT has disconnected several Russian banks from its global network, which connects over 11,000 member banks in 200 countries and territories worldwide.

The ruble initially plummeted nearly 30% against the dollar when the war started. Despite recovering, it is currently trading about 10% lower than at the beginning of the year, causing financial strain for ordinary Russians.

However, the reliance on Russian tourists is still low in Asia.

In 2019, Thailand received the most Russian tourists in the region with 1.4 million visitors, accounting for less than 4% of its total arrivals that year. Vietnam came in second, while Indonesia, Sri Lanka, and Maldives were the top five Asian destinations for Russian tourists.

The EIU stated that if there was no conflict, Russian tourism could have been more significant due to the restrictions on Chinese outbound travelers.