Two sets of numbers landed in Beijing this summer, and they described what looked like two different countries.

The first came from the customs administration. Chinese exports grew 25% in August in US dollar terms, quickening from 23.9% in July. The monthly trade surplus reached USD 119.09 billion.

Over the first eight months of the year the surplus totalled USD 805.51 billion, which puts the annual figure on course to pass USD 1 trillion for a second consecutive year. No country has ever run a goods surplus on that scale.

The second came from the statistics bureau. Retail sales in July grew 0.6% from a year earlier, down from 1% in June and well short of forecasts.

Fixed asset investment fell 6.7% in the first seven months, the steepest decline since April 2020. Property development investment dropped 19.2%. Urban unemployment ticked up to 5.2%.

This is the dichotomy that now defines the world’s second largest economy. Chinese factories have rarely been more competitive abroad. Chinese households have rarely been more reluctant to spend at home.

With second quarter growth cooling to 4.3%, against an official target range of 4.5% to 5%, Beijing is leaning harder on foreign buyers than at any point in the past decade.

Why the export side is roaring
The export boom is not simply a matter of cheap goods. It is being pulled by the global build-out of artificial intelligence infrastructure, which has lifted both prices and volumes for the high-tech goods China has spent a decade learning to make.

In the first eight months of 2026 the value of high-tech exports rose 42.9%. Semiconductor export values more than doubled, although volumes grew only 4.1%, a gap that shows how much of the gain is price rather than quantity.

Vehicle exports rose by more than half in both value and volume. Electric vehicles, solar cells and lithium-ion batteries did much of the rest of the work.

There is a second, less flattering driver. Weak demand at home means Chinese manufacturers have spare capacity and thin margins, so they sell abroad at prices few rivals can match.

Industries that depend on the domestic market have been fighting brutal price wars, a phenomenon Chinese officials call involution. Deflation at home has become a competitive weapon overseas.

Imports, meanwhile, are flattered by the same AI cycle. August imports rose 28.2% but still missed forecasts, and once semiconductors and petrochemicals are stripped out, the underlying picture is much softer.

Why the home side is stuck
The core problem is household balance sheets. Property once accounted for something close to a third of Chinese growth and holds the bulk of family savings.

New home prices fell 3.4% year on year in July and second-hand prices fell 5.4%, extending an erosion of wealth that is now in its fifth year.

Families who feel poorer save more and spend less, which is exactly what the data show. Chinese households save roughly 30% of income, against about 10% in most developed economies.

Three other forces compound it. Employment insecurity is the first. Youth unemployment has hovered above 16% for much of the year, and the sectors that once absorbed graduates, construction and property services chief among them, are shrinking.

Thin social protection is the second. Healthcare, pensions and eldercare still leave households carrying risk that the state absorbs elsewhere, so precautionary saving stays high.

Fading policy support is the third. The consumer goods trade-in subsidies that propped up appliance and car sales in 2024 and 2025 have run their course, and the base effects are now working against the figures.

Local government finances sit underneath all three. Land sales to developers once funded a large share of municipal spending, and that revenue has collapsed with the property market.

Cash-strapped local authorities are slower to pay contractors, slower to hire and slower to spend, which drains demand from thousands of small cities at once.

Chinese analysts flagged exactly this in July, noting that a pullback in broad fiscal spending and tighter local government rules pushed almost every domestic indicator in the same direction in the same month.

The one genuine bright spot is services. Travel, leisure and transport spending has held up better than goods, and there are signs of a gradual shift in how Chinese households allocate what they do spend.

Officials expect per capita services spending to move towards half of total household consumption over the next five years. It is a real change, but it is starting from a low base and it is not yet large enough to offset a shrinking appetite for cars, appliances and homes.

Prices tell the story. Consumer inflation was 0.5% in July, and core inflation, once gold and trade-in effects are removed, was about 0.8%.

Producer prices fell 0.7% on the month. Firms facing falling prices cut wages and delay investment, which weakens demand further.

That loop is the reason economists describe the slowdown as structural rather than cyclical.

What Xi’s government is doing
Beijing is not ignoring the problem, and its response has broadened considerably in 2026.

The most significant move is institutional. In July the State Council approved the 15th Five-Year Plan for Expanding Consumption, the first time expanding consumption has been given a dedicated national plan of its own.

It targets total retail sales of around 60trn yuan by 2030 and, more importantly, sets out to raise the household consumption rate rather than simply the volume of sales.

Services take priority, with elderly care, childcare, culture, tourism, health, sport and education singled out.

The plan also promises to relax market access in services and revise the rules on paid annual leave, a quiet acknowledgement that people cannot spend on leisure they never get.

The fiscal arm is doing the near-term lifting. The finance ministry says 12.4 trillion yuan has been allocated to education, social security, healthcare and housing, and that childcare subsidies reached more than 25 million infants and toddlers and their families in 2026.

Three new measures took effect on August 1, extending consumption loan interest subsidies to working capital loans and credit card instalments and raising the number of participating lenders from roughly 100 to about 400.

On the investment side, Beijing has deployed an 800 billion yuan new-type policy finance tool, paired for the first time with a central government interest subsidy of 1.5 percentage points for up to two years on eligible loans to smaller private firms.

A 500 billion yuan private investment guarantee programme is being rolled out over two years.

Monetary policy remains what the central bank calls appropriately loose. The People’s Bank of China cut rates on structural tools in January and has signalled room for further reserve requirement and rate reductions, while pledging to keep the yuan broadly stable.

Running alongside all of this is the anti-involution campaign, an effort to curb wasteful capacity, local government subsidy races and destructive price wars. If it works, it should stop deflation feeding on itself.

Why the gap is not closing
The obvious criticism is one Chinese economists make themselves. Most of the money still flows to supply rather than demand. Policy finance tools, guarantees and industrial upgrading strengthen the export side of the ledger that is already strong, while direct transfers to households remain modest and highly targeted.

There is also a timing trap. Strong exports reduce the urgency to fix the weaker half of the economy. Growth targets can be met on the back of foreign orders, which allows the harder decisions on property, land finance and the social safety net to slip.

Scale is the third issue. The consumption plan is a five-year document, and its most powerful levers, pension top-ups, hukou reform and a broader safety net, are the slowest and most expensive to pull.

Childcare payments and loan interest subsidies help at the margin, but they do not change the calculation of a family that has watched the value of its flat fall for four years running.

That is a risky bet, because the export boom is politically fragile.

A surplus heading past USD 1 trillion a year invites tariffs, quotas and anti-dumping cases across Europe, Asia and Latin America, not only the United States.

Washington and Beijing have been exploring reciprocal tariff reductions on about USD 30 billion of goods each ahead of a summit this month, but the wider pressure to rebalance trade is not going away.

For the rest of 2026, the indicator to watch is not the export headline. It is retail sales, core inflation and whether the new consumption plan converts into cash in household hands rather than credit lines for firms.

Until Chinese families feel secure enough to stop saving, the country will keep exporting the demand it cannot generate at home, and the world will keep pushing back.

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According to the latest China Beige Book, an independent survey of 1,321 businesses conducted between June 1 and June 22, manufacturing activity strengthened markedly during the month while consumer spending also recovered. The survey found luxury goods sales rose sharply, although tourism-related spending remained weak, highlighting uneven confidence among Chinese consumers.

“The second quarter is ending on a more positive note than it began, but this performance will need to repeat itself in July and August for there to be legitimate cause for celebration,” the report said.

The findings indicate that the world’s second-largest economy has regained some traction after losing momentum in April and May of 2026. Earlier official data showed retail sales weakening while manufacturing investment slowed, particularly in the metals, chemicals, and automotive sectors.

The recovery was driven largely by the export sector. Factory activity accelerated during June, with the survey reporting a strong increase in orders from the United States as exporters rushed shipments ahead of the possibility of higher American tariffs later this year.

China’s exports to the United States have rebounded in recent months after a prolonged downturn in 2025, while freight rates on Asia-US shipping routes have climbed to their highest levels in nearly two years as importers bring forward orders before potential tariff increases.

The ratio reached nearly 90% of levels seen in 2024, according to official data. In contrast, May 2025 figures showed China’s exports to the world’s largest economy had dropped to 70% of their 2024 levels.

Republican Donald Trump’s recent meeting with his Chinese counterpart Xi Jinping, as per analysts, signaled possibilities of lower tariffs as of now, while Washington has yet to impose additional duties that could emerge from its Section 301 probes targeting countries identified for overcapacity and forced labor practices. The 10% duty on goods from most major trading partners that the Trump administration imposed under Section 122 is set to expire on July 24.

However, the China Beige Book found that export growth to other Asian economies slowed during June, while demand from Europe remained broadly unchanged, suggesting the recent improvement is concentrated in the US market.

Tianchen Xu, senior economist at the Economist Intelligence Unit, said June’s recovery was “first and foremost led by the external sector,” reflecting businesses’ efforts to front-load exports before trade policy becomes more restrictive.

China is scheduled to release retail sales and industrial data for June, as well as Q2 GDP, on July 15. It is expected to report June 2026 trade data on July 14.

Investors will now focus on a series of key economic indicators due in mid-July, including trade figures, industrial production, retail sales, and second-quarter GDP data. Economists also expect China’s official manufacturing purchasing managers’ index to return to expansion territory, signaling that factory activity may be stabilizing.

Goldman Sachs has raised its Q3 growth forecast for the world’s second-largest economy to 5% from 4.5%, citing lower oil prices and faster government spending, after a tepid Q2 for which it predicted a growth ratio of 3.5%. Nevertheless, analysts warn that China will need a sustained revival in domestic consumption, rather than relying primarily on exports, if the economic recovery is to prove durable.

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The plan, detailed in documents released after a policy advisory panel meeting, earmarks 101.6 trillion yen for AI and chip-related spending alone. Unveiling the strategy, Takaichi said she intended to build a “strong and prosperous investment framework”, with the government expected to fund a little under half the total if inflation tracks current forecasts.

In introducing the plan, Takaichi said she aims to create a “strong and prosperous investment framework”, while mentioning that the blueprint calls for a combination of public and private investment to reach the target amounts. The government may contribute a little less than half if inflation stays in line with expectations.

“The investment roadmap marks a key step in Takaichi’s effort to put her stamp on Japan’s growth strategy as technological change and geopolitical tensions reshape economic priorities. The prime minister is seeking to channel investment into sectors that can strengthen economic security — from supply-chain resilience to critical technologies — while boosting the country’s long-term growth potential through support for emerging industries,” reported The Japan Times.

The blueprint forms a central part of Takaichi’s bid to reshape Japan’s growth strategy amid rising geopolitical tension and rapid technological change. It channels funds towards sectors seen as critical to economic security, including supply-chain resilience, while attempting to offset the structural labour shortages caused by Japan’s ageing population.

Within the AI and chips allocation, the largest share will go to semiconductors, alongside “vertical AI” tools built for specific industries. The government projects semiconductor investment will generate 443 trillion yen in economic spillovers by fiscal 2040, with physical AI and vertical AI adding a further 144 trillion yen and 222 trillion yen, respectively.

The initiative builds on Japan’s existing chip revival efforts. Since 2021, the government has committed roughly 7.2 trillion yen to semiconductors and AI, including about 2.6 trillion yen in support for state-backed venture Rapidus, according to the industry ministry.

Separately released long-term fiscal projections modelled three scenarios for the strategy’s impact. Under the most optimistic case, Japan’s debt-to-GDP ratio would decline steadily even with annual government spending of 10 trillion yen. In the other two scenarios, assuming weaker uptake or a continuation of current trends, the ratio would resume climbing during the 2030s. All three assume inflation settles near 2%.

The figures exclude potential rises in defence spending or consumption-tax cuts, suggesting fiscal strain could exceed current estimates. Takaichi’s agenda has already moved markets: The Nikkei 225 briefly breached 70,000 in June 2026, even as superlong government bond yields hit multi-decade highs on fiscal sustainability concerns.

The Japanese government has also released long-term economic and fiscal projections incorporating Takaichi’s growth strategy under three scenarios.

“In the most optimistic case, in which the strategy delivers as intended, the debt-to-GDP ratio is expected to decline steadily even as the government contributes 10 trillion yen in real spending toward the plan each year,” The Japan Times reported.

In the other two, where technological and market uncertainties curb the strategy’s impact, or where current trends persist, the ratio is projected to begin rising again during the 2030s. All three scenarios, as per the government, assume inflation stabilises at around 2%.

The blueprint’s debut also coincides with Takaichi’s government shifting its fiscal focus toward reducing the debt-to-GDP ratio, moving away from using a primary balance target that had guided government policy for more than two decades. The debt-to-GDP metric is generally considered easier to improve during periods of inflation.

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The military conflict involving the United States, Israel, and Iran began on February 28, 2026. It was not just a geopolitical event, but the beginning of an economic crisis reshaping the daily lives of millions of people in the United Kingdom.

This article is an attempt to explain what is happening, why it matters, and what it means for ordinary British workers, families, and businesses.

Distant war and British utility bills

The worst part of the Middle East conflict has been the blockade of the Strait of Hormuz, which passes one-fifth of all oil and LNG. Both Iran and the United States tried to play hardball with the maritime chokepoint to get the better of each other at the negotiation table in Islamabad. The biggest victim of the geopolitical power play has been global energy security.

Before the war, a barrel of Brent crude oil traded at $70-$72, but within weeks, future prices shot up to $119 per barrel. The prices that buyers were actually paying on the spot market (where oil is bought and sold for immediate delivery) reached $150 at the time, driven by intense panic buying and shortage fears.

The shock was specifically compounded for the United Kingdom, as the European country imports a large portion of its energy. Net import dependency stood at 43.8% in 2024, which means that when global energy prices spike, the UK does not have enough domestic supply to shield itself.

Wholesale gas prices inside the UK surged from 78 pence per therm at the end of February to 171 pence per therm in the weeks that followed. That is more than double in a matter of weeks.

The International Energy Agency (IEA) described what happened as the single most significant supply disruption in the history of the global oil market. Global oil supply fell by over 10 million barrels per day in March 2026 alone.

The ripple effects were felt almost immediately at petrol stations across the UK. The average price of petrol rose from 131.6 pence per litre to 140.2 pence per litre. Diesel jumped from 141.1 pence to 158.7 pence per litre. These were not gradual, creeping increases. They happened within a month.

Inflation is back, and it is stubborn

The official measure of inflation in the UK, known as the Consumer Price Index (CPI), rose to 3.3% in March 2026. That sounds like a modest number until you consider that just two months earlier, the Bank of England (BoE) had been close to hitting its 2% target and was preparing to start cutting interest rates. Those plans are now on hold indefinitely.

The largest driver of the March inflation rise was motor fuel, which went up by 8.7% in a single month. The last time fuel prices rose that sharply in a single month was during the early period of the Ukraine war. Food inflation is expected to follow.

The Food and Drink Federation has warned that food prices could rise by as much as 9% by the end of 2026 if supply disruptions continue. Part of the reason is fertiliser. Producing nitrogen fertiliser requires enormous amounts of natural gas, and many fertiliser suppliers in the Gulf and Egypt can no longer export their products because of the maritime blockade.

British farmers are facing doubled fertiliser costs, and many have decided it is simply not worth planting crops this year. Less domestic food production means more imports. More reliance on imports, in a disrupted global market, means higher prices at checkout.

There is also an unusual and little-discussed risk around carbon dioxide gas, which the food industry depends on for slaughtering livestock humanely, carbonating drinks, and preserving packaged goods.

The government has already invested 100 million pounds to reopen an industrial plant on Teesside specifically to ensure a domestic carbon dioxide supply. Major retailers like Tesco say shortages have not yet reached shelves, but the Food and Drink Federation is not ruling out significant gaps in availability by the summer if the Strait remains closed.

Growth has stalled

Britain’s economy was beginning to recover early in 2026. GDP grew by 0.5% in February, which was a small but encouraging sign. That momentum has now been cut short. The EY Item Club, one of the UK’s most respected economic forecasting bodies, now expects the economy to grow by zero in both the second and third quarters of the year. For the full year of 2026, it has cut its growth forecast from 1.4% down to 0.7%.

Matt Swannell, the Chief Economic Adviser to the EY Item Club, warns that the labour market is entering a period of severe distress. Matt remarked, “Spiralling energy costs and disruption to supply chains will push the UK to the brink of a technical recession… The heightened energy prices from the war are also set to deliver the ‘biggest hit since the pandemic’ to the jobs market, with the jobless rate projected to peak at 5.8% by the middle of 2027.”

The International Monetary Fund has gone further in some respects. It identified the United Kingdom as the country that suffered the biggest downward revision to its growth forecast among wealthy nations in its spring 2026 outlook. The IMF now expects UK GDP to grow by just 0.8% in 2026, compared to 1.3% predicted earlier.

The OECD, another major international economic body, expects Britain to have the second-lowest growth rate and the second-highest inflation rate among G7 nations. The United States, by contrast, is expected to grow by 2.3%. The gap is stark.

Why is Britain being hit harder than most? Several reasons compound each other. The UK is a net importer of gas. It has very limited gas storage, estimated at just two days of supply at the peak of the crisis. Its economy is highly integrated with international trade and supply chains. And its growth was already sluggish entering 2026, leaving very little buffer when the shock arrived.

The word economists are reaching for to describe this situation is stagflation. That is what happens when an economy stops growing, but prices keep rising. It is the worst of both worlds, and it is the same condition that devastated many Western economies in the 1970s during the oil embargo. The last thing any government wants to see return.

Jobs are being lost

Behind the big numbers are real people losing real work. British employers cut 11,000 jobs in March 2026, the first clear month where the economic fallout from the Iran conflict showed up directly in employment figures. Analysts from EY Item Club estimate that approximately 250,000 jobs could be lost by mid-2027 if current conditions persist.

The unemployment rate stood at 5.2% at the start of 2026. Forecasters now expect it to rise to 5.8% by mid-2027, which would mean over 2.1 million people looking for work. That would be the highest level of unemployment in more than a decade.

The sectors bearing the brunt are those that depend heavily on energy or on consumer spending. Manufacturing, hospitality, logistics and construction are all under severe pressure. Businesses that were already operating on thin margins are finding that rising energy costs, supply chain delays, and weakening customer demand are simply too much to absorb simultaneously.

Many companies are moving into what economists call a defensive posture. Instead of hiring, investing, or expanding, they are cutting costs and building cash reserves to survive the uncertainty.

The Deloitte CFO Survey, which measures confidence among finance directors at major British companies, recorded a collapse in sentiment to a net figure of minus 57% in late March. That is the most pessimistic reading since the height of the COVID-19 pandemic.

Consumers are pulling back

Ordinary households are responding to the situation predictably. When things feel financially uncertain and prices are rising, people spend less. Consumer confidence, as measured by the Deloitte Consumer Tracker, fell to minus 14.1% in the first quarter of 2026, its lowest level since 2023.

Spending power is expected to fall by 0.3% across the year for the average household. People are cutting back on things they do not consider essential. Travel has taken a particularly sharp hit. Spending on travel fell by 3.3% in March 2026, the first such decline recorded by Barclays in five years.

Jet fuel prices have more than doubled since the conflict began, and airlines are passing those costs on to passengers. International holidays are being postponed. People are choosing domestic breaks instead, or simply staying home.

The hospitality sector, which was already struggling with the April 2026 increase in the minimum wage and higher business rates, is now facing what industry figures are calling a summer of shortages. Breweries are worried about carbon dioxide availability ahead of the football World Cup in June, usually one of the most commercially important periods in the calendar.

What the government is doing

Chancellor Rachel Reeves has been walking a difficult line. On one side, there is enormous pressure to protect households and businesses from rising costs. On the other hand, the government is painfully aware that uncontrolled spending could damage Britain’s fiscal reputation and push up borrowing costs, as happened during the 2022 mini-budget crisis.

“This is not our war, but it is pushing up bills for families and businesses. That’s why it’s my number one priority to keep costs down… Obviously, no sensible person is a supporter of the Iranian regime, but to start a conflict without being clear what the objectives are… I do think that is a folly and it is one that is affecting families here in the UK,” The Chancellor said.

The approach taken has been cautious and targeted. Rather than offering blanket support to everyone, the government has focused on the most vulnerable. It has extended the existing 5 pence cut in fuel duty, saving the average driver around 90 pounds per year. It is also working on contingency plans for further energy bill support in the autumn, when demand for gas heating typically rises sharply.

To fund these measures, the government has expanded the windfall tax on electricity generators. Companies that generate electricity from gas-linked sources are currently making exceptional profits because of how electricity pricing works in the UK market.

The government has raised the Electricity Generator Levy from 45% to 55%, capturing more of those windfall profits and redirecting them toward household support. This levy has also been extended beyond its original 2028 end date.

The government has explicitly said it cannot absorb every price rise on behalf of the population. It is a difficult message to deliver, but it reflects the reality that with national debt on track to reach 100% of GDP by 2029, the room for large unplanned spending is very limited.

Internationally, Reeves has been vocal in criticising the war itself. She has called it a mistake and a folly, language that puts her at odds with US Treasury Secretary Scott Bessent, who has defended the conflict as a necessary cost for long-term global security.

Reeves led a joint statement signed by finance ministers from 11 countries, including Japan, Australia, Spain, and the Netherlands, calling for a negotiated resolution and the reopening of the Strait of Hormuz. The diplomatic tension with Washington adds another layer of uncertainty to the UK’s economic relationships.

BoE is stuck

Normally, when inflation rises sharply, a central bank’s response is to raise interest rates. Higher rates make borrowing more expensive, which cools spending and helps bring prices down. But the Bank of England (BoE) is in an unusual bind.

Before the Iran conflict, financial markets expected the Bank to start cutting its main interest rate in April 2026, as inflation had been falling toward the 2% target. Now, with inflation at 3.3% and rising, those cuts have been shelved. But the Bank is not raising rates either.

The reason is that the economy is simultaneously weakening. Raising rates aggressively into a slowing economy risks causing a deeper recession. The Monetary Policy Committee has held the rate at 3.75% and is expected to keep it there for some time.

Economists describe this as an unenviable balancing act. If the Bank holds firm, inflation may become entrenched, especially if workers begin demanding higher wages to keep up with rising petrol and food costs. If it cuts rates, it risks fueling inflation further. The most likely outcome, according to analysts, is that rates stay on hold until around mid-2027, when inflation is expected to gradually return closer to target.

For homeowners approaching the end of fixed-rate mortgage deals, this is unwelcome news. Over a million British households are expected to face higher mortgage payments in the coming months as their fixed deals expire, adding to the broader pressure on household budgets.

Industry under pressure

Some of the starkest stories from the current crisis involve British manufacturers. Energy-intensive industries (those that need enormous amounts of gas or electricity to operate) are in genuine difficulty. Steel, chemicals, glass, ceramics, cement, and paper are all facing input cost increases that many cannot absorb or pass on.

The British Plastics Federation has reported that 58% of its member companies are experiencing severe or significant operational impacts. Almost all of its members are reporting rising raw material and energy costs.

Some firms have added surcharges of up to 30% to their prices, which risks sending customers to overseas competitors, particularly American ones, who benefit from access to cheap domestic natural gas and are insulated from the Hormuz disruption.

The construction sector is also struggling. Output had already fallen by 2% in the three months to February 2026, with private housebuilding dropping 6.5%. The conflict has made things worse through supply chain delays and surging material costs.

Bricks, cement, asphalt, and insulation are all more expensive to produce when energy costs are this high. Construction experts have warned that many projects are moving from commercially challenging to commercially unviable.

One of the most unexpected consequences involves renewable energy. Two major offshore wind projects off the Norfolk coast are facing delays because key components, specifically steel turbine foundations and offshore substations, were ordered from suppliers in the UAE. Those components cannot currently be shipped through the Strait of Hormuz. The conflict that is driving demand for cleaner energy is simultaneously delaying the infrastructure needed to deliver it.

Where things stand

Growth has stalled. Inflation is rising. Jobs are being lost. Businesses are pulling back. Consumers are cutting spending. And the root cause of all of it, the blockade of a narrow waterway seven thousand kilometres away, shows no immediate sign of resolution.

What makes the situation particularly difficult is that even a ceasefire would not instantly fix things. Energy infrastructure that has been damaged takes time to rebuild. Supply chains that have been disrupted take months to restore. And business confidence, once lost, is slow to return.

Britain’s vulnerability at this moment reflects structural issues that existed long before the conflict began. The country is too dependent on imported energy. Its gas storage is inadequate. Its industrial base has been gradually hollowing out for decades. The current crisis has exposed all of that with uncomfortable clarity.

The months ahead will be tough, particularly for lower-income households, energy-intensive industries, and anyone whose livelihood depends on consumer spending. The government and the Bank of England are trying to prevent the worst outcomes. But the margin for error is small, and the decisions being made in Washington, Tehran, and on the waters of the Persian Gulf will matter as much as anything decided in Downing Street or Threadneedle Street.

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When the United States and Iran effectively shut down the waterway in late February, global energy markets responded loudly. However, the consequences for the global food supply represent a slower, quieter, and more dangerous impact that many people have not noticed.

The Silence in the Strait

Before the conflict, around 130 ships passed through the Strait of Hormuz every day, but by March 16, that number collapsed to single digits, representing a reduction of 95%. This left more than 750 commercial vessels either stranded in the Persian Gulf or circling in holding patterns outside the conflict zone, waiting for a signal that never came. These ships weren’t just deterred by the physical danger of being caught in a war zone. The most decisive factor in their decision was the prohibitive cost of insuring a ship through the strait, which spiked overnight.

Marine war insurance is a specialised financial contract that has existed for centuries to protect ship owners if a vessel is damaged or destroyed in a conflict zone. In normal times, coverage costs between 0.125% and 0.25% of the ship’s value for a single voyage. For a typical large cargo vessel valued at around $120 million, this translates to roughly $48,000 per transit.

However, the financial landscape changed dramatically during the conflict. Following attacks on vessels in the Gulf, and reports of mines in shipping lanes, insurers repriced premiums to between 1% and 10% of the hull value. This dramatic shift pushed the cost of a single transit for the same vessel to $1.2 million.

At these rates, most shipping companies turned around and called it quits. Now, navigating across the strait for ordinary commercial trade was near impossible, regardless of military risk.

Ships that really needed to reach the Gulf started taking detours around the southern tip of Africa, adding weeks of transit time and burning significantly more fuel in the process. The world’s most efficient trade artery had been blocked, and global supply chains were about to discover how dependent they had become on it.

Never Just About The Oil

When the strait closed, the world’s focus was primarily on oil. The Persian Gulf supplied approximately 20% of the world’s daily petroleum consumption, causing energy markets to react with extreme alarm. However, this fixation on oil obscured a more significant vulnerability. The region also produces a substantial portion of the world’s industrial and agricultural raw materials.

One of the most critical materials is helium, with Qatar alone supplying nearly one-third of the global total. Far from being used only for party balloons, helium is essential for cooling the superconducting magnets inside MRI scanners. Without a reliable supply, hospitals globally risk losing their diagnostic imaging capabilities.

Additionally, the Gulf region is a major hub for chemical feedstock and agricultural components. It ships roughly a third of the world’s methanol, which is a foundational ingredient for manufacturing plastics, resins, paints, and synthetic fibres. Furthermore, the region supplies about half of the world’s seaborne sulphur, a critical resource required for producing phosphate fertilisers and refining battery metals such as nickel and cobalt.

But among all the commodities that pass through the Hormuz corridor, nitrogen fertiliser is perhaps the most important.

Approximately 33% of all globally traded fertilisers passes through the Hormuz corridor. For urea, the world’s most widely used nitrogen fertiliser, that figure rises to 46%. Nearly half the world’s supply of the single most important agricultural input on the planet was suddenly unable to reach the farmers who needed it.

The Invisible Line Between Gas Wells and Grain Fields

To understand this, it’s important to familiarise ourselves with the chemistry. In the 19th century, there was an influential English economist and demographer known as Thomas Robert Malthus who believed that the population growth of the world would outpace the food supply, leading to an inevitable social crisis.

In his ’Essay on the Principle of Population’, he noted that the human population was doubling (geometrically) every 25 years back then, while food production increased arithmetically (linearly). He envisioned that there would be a point of crisis which would lead to wars, famine and extreme poverty.

However, in the 20th century, German scientist Fritz Haber successfully synthesised ammonia from nitrogen gas (from the air), and hydrogen gas under high pressure and temperature using an osmium catalyst.

With this information, Carl Bosch transformed Haber’s laboratory into a massive industrial-scale process for the company BASF by 1913. This created industrial fertilisers that would lead to green revolutions across the globe, feeding billions of people effortlessly. Malthus’s apocalyptic predictions did not come true because of scientific advancements, which led to the creation of the mass production of nitrogen fertilisers.

However, the blockade on the Strait of Hormuz has cut off the supply of natural gas, which is both a raw material and a source of energy in fertiliser production. This development inadvertently might cause the fulfilment of the Malthusian prophecy.

The numbers bear this out starkly. “We have 30-35% of crude oil, which is not moving, 20% of natural gas…and between 20 to 30% of other fertilisers that are not moving out,” said Maximo Torero, Chief Economist of the Food and Agriculture Organization.

Countries like Qatar, Saudi Arabia, and the UAE have built massive industrial complexes converting cheap domestic gas into exportable fertiliser.

Qatar State Fertiliser Company (QAFCO) operates the single largest urea production facility on earth, and supplies 14% of the global urea on its own. When the conflict disrupted regional gas infrastructure and made maritime export impossible, QAFCO went offline.

Saudi Arabia’s SABIC petrochemical complexes declared force majeure (a legal term meaning circumstances beyond their control prevented them from fulfilling their contracts). Storage silos filled to capacity with nowhere to send their product, and production halted. In one stroke, 14% of the world’s urea supply vanished from the market.

This isn’t just a Gulf issue. Natural gas prices spiked globally as buyers scrambled for alternative supplies, and this crushed fertiliser production in Europe too.

In Europe, natural gas accounts for up to 80% of the variable cost of making fertiliser. When gas prices spiked by 60% following escalation of the conflict, major producers found themselves making fertiliser at a loss.

Yara International (one of the world’s largest fertiliser companies) cut production at its European plants to 35% of capacity. This removed the equivalent of millions of tonnes of finished products from an already devastated market.

Prices, Panic and the Planting Window

Fertiliser prices are spiking at an alarming rate. Urea was traded around $450-$490 per tonne in early February, but it is now being sold at over $700 per tonne by late April. That is roughly a 50% increase in mere weeks.

Other fertiliser products are also seeing a surge, with liquid nitrogen variants jumping 22% month-over-month. Consequently, distributors are now rationing retail sales, and dealers have stopped quoting future prices because there is arguably no reliable way to predict what replacement inventory would cost.

The most dire consequence of all is the catastrophic timing, as the Northern Hemisphere’s spring planting season is just beginning. This matters because farming, unlike most other industries, cannot pause and resume. Crops have biological windows in which fertilisers must be in the ground, or else you face a permanent yield loss. There isn’t a way to catch up next year.

In an April survey of over 5,700 farmers across all 50 states, the American Farm Bureau Federation found that 70% of respondents could not afford necessary fertiliser, with regional impacts varying significantly. In the South, nearly 80% of farmers were priced out because crops such as cotton, rice, and peanuts require fertiliser close to planting time, preventing them from pre-purchasing stock. Conversely, the Midwest saw some protection through advance purchasing as 67% of farmers locked in their supplies early, though one-third of the region’s farmers remained entirely exposed to volatile spot prices.

The small farmers were hit the hardest. Large-scale commercial operations were better positioned to pre-book supplies months in advance and had the financial depth to absorb price shocks. However, smallholders and family farms operating on thin margins, purchasing inputs closer to planting time, did not have the time to adjust or cope with the doubled prices.

“The skyrocketing cost of fuel and fertiliser is creating more economic hardship for farmers who have already endured years of losses,” said Zippy Duvall, President of the American Farm Bureau Federation. “Without the necessary fertilisers, we’ll face lower yields, and some farmers will reduce acres altogether.”

University specialists and soil scientists, who calculate the economic efficiency of fertilisers, revised their guidance as urea prices rose. The optimal application rate for corn in Illinois dropped by 6 pounds per acre.

It might sound like a modest change, but the relationship between fertiliser and yield is not linear. Research from precision agriculture companies reveals that cutting application rates significantly below the optimal level creates disproportionate yield losses.

For example, a farmer who uses half the recommended nitrogen does not get half the yield reduction. It can be considerably worse. This means farmers who ration inputs very aggressively in response to price shocks end up losing a lot more in crop revenue for what little they can save on fertiliser.

This effect will alter planting decisions going forward. Corn, a very nitrogen-hungry crop, might be abandoned in favour of soybeans, which can absorb some of the nitrogen they need from the atmosphere. This is going to reduce the total caloric output, and markets are going to adjust well beyond the 2026 harvest.

Torero has warned that policy coordination is now essential to prevent the crisis from deepening. “We need to avoid export restrictions…especially now for fertilisers and energy,” he said, cautioning that without coordination, vulnerable countries could be priced out of essential supplies.

David Laborde, Director of Agrifood Economics at the FAO, echoed this concern from the demand side. “If we have rising demand because biofuels start to consume more…and lower supply because we have less input…food prices will go up,” he warned.

Ill-Prepared for The Indian Monsoon

India has structural vulnerabilities which the fertiliser shock makes worse. It imports 90% of its fertiliser raw materials. The kharif season (the monsoon planting cycle sown in June and July) produces almost 100 million tonnes of rice, which is the cornerstone of food security for more than a billion people.

The Indian government has moved quickly to protect its domestic fertiliser production, declaring an emergency guarantee of gas supply to fertiliser sectors at 70% of historical consumption. The FACT plant in Ambalamedu, Kerala, which produces NPK and DAP fertilisers, was flagged as a critical operation requiring protection.

Indian diplomats secured alternative fertiliser imports, arranging 2.5 million tonnes from Morocco, and 3 million tonnes from Russia via the much longer Cape route. Both these deals cost significantly more than what Gulf supplies usually cost.

Farmers in Punjab are anxious. India’s most productive agricultural state saw widespread panic buying and hoarding. Retailers report distributors bundling unwanted products with essential ones, forcing farmers to buy expensive supplementary inputs they do not need in order to access granular urea.

Harjinder Singh of Saidwan village in Kapurthala is one of thousands facing the consequences of this shortage firsthand. “I had never realised that getting a bag of urea would be such an ordeal, when paddy cultivation is still over a month away. Generally, the time after wheat harvesting is for celebrations. This year, the days preceding the harvest were filled with anguish because of the quality of grains. Post-harvest, we are grappling with urea shortage,” he said.

The situation could be further complicated by the weather. The Indian Meteorological Department forecasts the 2026 southwest monsoon projected rainfall at 92% of the long-period average, the lowest first forecast in at least 25 years. Global agencies simultaneously indicated that there is a 62% probability of El Niño conditions developing in the summer months, which is associated with weaker monsoons. The convergence of potential drought, depleted reservoirs, and fertiliser shortages creates a genuinely alarming picture for the next kharif harvest.

The urgency was captured sharply by the head of the UN Task Force on April 21. “With hunger looming, life-saving fertiliser shipments cannot wait,” the official said. “If we don’t get some solution immediately, the crisis will be very significant and severe, particularly for the poorest countries.”

Russia’s Quiet Leverage

Russia found itself in a powerful position as the Persian Gulf fertiliser infrastructure went down. Russia exports 23% of the world’s ammonia and 14% of its urea via the Black Sea and Baltic ports, which are unaffected by the Hormuz closure.

In what analysts are calling ’fertiliser diplomacy’, Russia leverages exports to cultivate political relationships across the Global South. Countries in Africa, like Nigeria, Ghana, and Ethiopia, are pre-purchasing Russian fertilisers for the third quarter of 2026 on terms that go beyond commercial transactions.

Senior Russian officials have been explicit about their strategy. “The escalation of hostilities in the Persian Gulf region has led to the closure of the Strait of Hormuz. The logistics and trade-economic architecture, as well as global energy and food security, are on the brink of collapse,” said Russian diplomat Alexander Venediktov. He described the situation as fraught with ’very serious consequences’ for countries dependent on imported hydrocarbons, fertilisers, and food, and was candid about Moscow’s positioning. “Nitrogen additive prices have risen by 30%. In the current extremely challenging situation, Russia is ready to act in coordination with its friends, countries of the Global South and East.”

It is not the first time Russia has done this. They used a similar approach during the Black Sea Grain Initiative in 2023, when grain export negotiations became a lever for extracting broader diplomatic concessions.

China has pursued a parallel strategy from the supply side by implementing strict export controls on phosphate fertilisers and urea to prioritise domestic agricultural security, which has subsequently cut off critical volumes to Southeast Asia and other import-dependent regions. This has further tightened a global market that was already in crisis.

The End of Just-in-time

Unlike oil price spikes, fertiliser or agricultural shocks don’t announce themselves immediately. Oil prices go up at the petrol pump within days, but fertiliser shortages take months to reveal the economic damage. The crisis has a built-in delay mechanism. We will see the consequences of what is happening now in the third and fourth quarters of this year.

The World Bank has observed that markets are already pricing in expectations for a smaller harvest, as evidenced by a 13% increase in wheat prices and a 7% rise in cereal indices.

The actual supply reduction has not yet materialised, but when it does, food price inflation will skyrocket.

For wealthy countries, this means higher grocery bills and compressed farm margins. However, for lower-income nations, it can be devastating.

Nations across Sub-Saharan Africa and South Asia will suffer significantly because they rely heavily on imports, and lack the capacity to subsidise fertilisers. In tropical and sub-tropical regions, the relationship between fertiliser application and crop yield is stark due to nutrient depletion in the soil. If things remain unchanged, we can expect a 40-50% reduction in maize yield across African countries.

The UN World Food Programme and the Food and Agriculture Organization expect the combined effects of conflict, fuel price inflation, and fertiliser shocks to push an additional 45 million people into food insecurity. This is on top of the 318 million people already facing severe food insecurity worldwide. At least 18 million people are expected to cross the hunger threshold in East and Southern Africa alone.

The lesson we can learn is structural. Our global economic system was built on the philosophy of maximum efficiency and minimum inventory to eliminate redundancy, but that is because the world was predictable and global trade was always available.

But things have changed as governments are now confronting the problem in real time. Spain has allocated €500 million to subsidise farmers from price shocks, while Ghana distributed fertilisers free of charge to prevent crop failure. Additionally, India redirected its gas supply from industrial users to fertiliser plants to address the crisis.

These are emergency measures improvised under pressure. In the long run, we will need something more durable. Domestic fertiliser production capacity in import-dependent countries has to improve.

Impact Will Be Felt Beyond 2026

Economic models suggest that the effects of the 2026 shock will likely persist for years. Even under an optimistic scenario in which the Strait reopens by mid-year, urea and phosphate prices are going to be elevated well into 2028. Qatar’s Ras Laffan gas complex has been attacked, and is damaged. It might take years to be fully operational again. Maritime insurers also need prolonged periods of stability before war risk premiums subside.

The yield this spring cannot be retroactively restored. The harvest will be what it will be. The world’s food supply depends on an unbroken chain of energy, chemistry, shipping, and trust. Breaking any one link in this chain can have severe consequences in every direction, affecting farmers in Arkansas and Punjab, grocery shoppers in Lagos and Jakarta, and boardrooms in Rotterdam and Chicago.

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The quarterly labour force survey data, released by Statistics South Africa (Stats SA), showed that the number of employed persons in the quarter fell by 345,000 to 16.8 million, while the ranks of the unemployed swelled by 301,000 to 8.1 million.

To simplify things further, about a third of South Africa’s labour force is without a job, and things may get worse as the economic outlook sours with each passing day, with the Middle East conflict involving Iran, the United States and Israel showing no signs of permanent stoppage.

However, there was a ray of hope, as the manufacturing (38,000), mining (32,000) and agricultural sectors (10,000), the traditional trio that has historically served as the bedrock of South Africa’s economy, ended up adding jobs. In fact, the “skilled agriculture” category witnessed an increase of almost 60% from the previous quarter.

Also, the overall picture was gloomy, with community and social services shedding 206,000 workers, while the labour-intensive construction sector lost 110,000, a fall of 15.5%. Among the provinces, only KwaZulu-Natal added employment, a paltry 6,000.

Although there was a 2.0-percentage-point rise in youth unemployment, it remained below the record high of 35.3% reached in Q4 2021 when the COVID pandemic was still hammering the economy.

To complicate things further, South Africa’s GDP has been growing at a snail’s pace, with 2025 registering a paltry 1.1% increase, lower than the country’s central bank and National Treasury forecast. While the uptick was mainly concentrated in consumer-facing sectors, primary and secondary ⁠parts of the economy shrank. In 2025, investor confidence increased due to the improving fiscal situation and the Ramaphosa government’s commitment to maintaining low inflation.

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GDP, or Gross Domestic Product, is simply the total value of everything a country produces: goods and services combined. When GDP grows, it generally means more jobs, higher incomes, and better living standards.

Spain’s 2025 performance gives grounds for optimism. Growth that year came in at 2.8%, driven largely by strong domestic spending. This means Spanish households and businesses were buying and investing more, even as exports faced headwinds from rising imports. That figure has since been revised upward to 2.4% for the full year, still well ahead of its European peers.

Unemployment, one of Spain’s most persistent challenges, is expected to fall to 9.7% in 2026, down from 12.2% as recently as 2023. Fewer people out of work means more people earning and spending, which in turn keeps the economy moving. The public debt-to-GDP ratio, a measure of how much the government owes relative to what the economy produces, is projected to fall to 99.3%. The annual deficit is hovering near the 3% threshold set by EU fiscal rules.

The IMF agrees with the positive assessment, forecasting Spain will lead eurozone growth at 2.1% in 2026, with inflation averaging around 3%. CaixaBank Research, one of Spain’s leading financial institutions, has similarly revised its 2026 forecast upward to 2.1%, following strong data from the fourth quarter of 2025.

Two structural factors underpin Spain’s resilience. Namely, a robust services sector, particularly tourism, and a steady influx of working-age immigrants that is expanding the labour force and consumer base. Together, these dynamics give Spain a cushion that most of its European neighbours currently lack.

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The core problem is a combination of rising energy costs and shaky consumer confidence. Oil prices have surged to an average of $103 per barrel, while natural gas, which powers homes and factories across Europe, is trading at €55 per megawatt-hour. These are not abstract numbers. When energy gets expensive, it costs more to produce goods, transport them, and heat homes. Businesses hold back on investment. Families spend less. That chain reaction is precisely what Italy is experiencing right now.

Consumer price inflation, the rate at which everyday prices rise, is expected to hit 2.6% this year as a direct result of these commodity spikes. To put that in plain terms, goods and services that cost €100 last year will cost around €102.60 this year. The bank projects inflation will ease below 2% by 2027 and 2028, provided that energy prices gradually fall as futures markets currently suggest.

Geopolitical instability, particularly the ongoing conflict in the Middle East, adds another layer of risk. In a worst-case scenario where hostilities drag on, Italy’s 2026 growth could shrink by a further 0.5 percentage points, and 2027 could lose a full percentage point off its forecast, a significant blow to an already fragile recovery.

There are some bright spots. The labour market remains relatively stable, wages are growing, and the bank expects a slow recovery to begin in early 2027 once inflationary pressure eases. However, Italian manufacturers face stiffening competition from cheaper Chinese goods, which limits their ability to grow.

The Banca d’Italia is urging policymakers to pursue productivity reforms and keep a close watch on global risks before conditions worsen further.

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This comes a week after a series of downbeat business and consumer morale readings and cautious outlooks from top listed companies. The closely watched set of S&P Global surveys of purchasing managers released recently showed worse to come. It pointed to the 21 countries of the euro zone as among the hardest hit, with the preliminary reading of its headline index for the region falling from 50.7 in March to 48.6 in April – a sub-50 tally that indicates a shrinkage in activity.

The input price index surged to 76.9 from 68.9, showing how eurozone factories are facing a jump in their production costs. The index covering the bloc’s dominant services industry, meanwhile, sank to 47.4 from 50.2, well below a Reuters poll estimate of 49.8.

“The euro zone is facing deepening economic woes from the war in the Middle East. Increasingly widespread supply shortages, meanwhile, threaten to dampen growth further while adding more upward pressure to prices in the coming weeks,” said Chris Williamson, chief business economist at S&P Global.

On the other side of the Atlantic, however, S&P’s gauge of US activity rebounded but was also characterised by the same kinds of panic buying in the face of war-caused supply shortages and price pressures that held back EU activity. Delivery times and output prices hit their highest levels since the post-COVID supply chain snarls and inflation wave peaked around four years ago.

The manufacturing PMI increased to a 47-month high of 54.0 from 52.3 in March, beating economists’ expectations for a reading of 52.5. The measure of new orders received by factories also rose to 54.8 from 52.3 in March. The services PMI also recovered, rising to ‌a reading of 51.3 from 49.8 last month, the first contraction since January 2023.

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EXIM Thailand has been a key force in driving Thailand’s economic, social, and community development across all sectors, facilitating sustainable growth for a better future for all. This commitment is deeply rooted in environmental, social, and governance (ESG) principles. The bank has set a bold target to increase ESG loans to 50% of total outstanding loans by 2027.

During the recently concluded International Finance Awards, EXIM Thailand was named the “Best Corporate Governance – Banking – Thailand 2025,” in recognition of its strong governance framework, transparency, and commitment to ethical banking practices.

“As the first state-owned specialised financial institution to achieve ISO 14064-1:2018 certification, our bank has enhanced its greenhouse gas emissions reporting and management in alignment with international standards. This milestone reaffirms our dedication to steering the Thai economy toward a low-carbon society and achieving carbon neutrality, while supporting the United Nations Sustainable Development Goals (SDGs),” EXIM Thailand President Charat Rattanaboonniti told International Finance.

EXIM Lays Out Roadmap For 2026

EXIM Thailand President Charat Rattanaboonniti has been in the news, as he laid out EXIM Thailand’s policy directions and strategic positioning, on the occasion of the bank marking its 32nd anniversary and 33rd year of business operations. Noting the global economy’s struggles against risk factors like trade war and escalating, prolonged geopolitical tension, which have disrupted supply chains, trade, and investment, the EXIM President said that major economies are showing signs of a slowdown, while the Thai baht is undergoing high volatility due to external factors, increasing risks to export revenues and costs.

“Energy and logistics costs also remain elevated. At the same time, global trade rules are evolving rapidly and becoming increasingly complex, particularly with the rise of non-tariff barriers, environmental standards, and sustainability requirements, which are now critical conditions for access to global markets. Climate change has further escalated business risks, as reflected in the severe flooding in southern Thailand in 2025, adding to uncertainties for Thai enterprises,” he added.

Thai entrepreneurs, especially SMEs, are facing structural challenges, including limited access to capital and liquidity, insufficient market information and knowledge, constraints in expanding trade networks, and difficulties in managing risks related to exchange rates, buyer countries, and overseas buyers themselves. Since these factors are directly undermining the competitiveness and growth potential of these ventures in global markets, EXIM Thailand has extended its helping hand by repositioning itself as an “Export Co-pilot,” providing end-to-end support grounded in a deep understanding of export trends, risk management, and the practical needs of exporters. This support spans advisory services, knowledge enhancement, liquidity provision, and comprehensive risk management tools at every stage of business operations.

“In 2026, EXIM Thailand will further advance its Export Co-pilot role through concrete actions by enhancing its suite of total solutions for Thai exporters, particularly SMEs, to help them navigate global volatility and overcome domestic structural constraints. The Bank emphasises strengthening risk protection through loan packages bundled with export credit insurance facilities and foreign exchange risk management instruments to enhance liquidity and competitiveness. In parallel, EXIM Thailand is revamping its work processes through innovation and digital transformation to enable data-driven decision-making, strengthen cybersecurity, and manage risks in a holistic manner. These efforts are implemented under the S-M-A-R-T strategy, comprising SME Export Grooming to elevate Thai entrepreneurs to international standards, Market Expansion to unlock global trade opportunities, Advocacy and Sustainability to promote awareness and sustainable growth, Revamp Digital Systems to enhance digital capabilities and innovation supporting business expansion, and Teamwork Spirits to foster the EXIM One Team culture that drives Thai businesses, EXIM Thailand itself, the country, and the world toward sustainability,” Charat Rattanaboonniti said.

Another focus area for EXIM Thailand in 2026 will be placing strong emphasis on non-financial support through capacity-building workshops and development programmes, which will enable Thai exporters adapt to global changes and comply with new international trade requirements.

These efforts are reinforced through collaboration with public and private sector partners, including the Department of International Trade Promotion, Department of Foreign Trade, Board of Investment, Federation of Thai Industries, Board of Trade of Thailand, and Thai National Shippers’ Council. The objective is to empower Thai producers and exporters across the supply chain to grow sustainably, with readiness in financing, market intelligence, production processes, and ESG-oriented business practices aligned with demand for high-value and environmentally friendly products in emerging markets.

Capping Off A Fruitful 2025

For its 2025 operating results in enhancing liquidity, stimulating exports, and opening new markets, EXIM Thailand recorded new loan approvals of 54,346 million baht to strengthen liquidity and support the continuity of Thai businesses amid global volatility and intense competition.

The Bank also promoted risk diversification by expanding into new frontier markets to reduce reliance on traditional markets. Loan approvals in CLMV countries (Cambodia, Lao PDR, Myanmar, and Vietnam) and other new markets, on the other hand, totalled 9,125 million baht. As a result, total outstanding loans and commitments reached 191,800 million baht as of the 2025-end, while export credit insurance and investment insurance recorded 194,564 million baht in insurance business turnover.

In terms of asset quality management, EXIM Thailand has prioritised proactive risk management to maintain a healthy loan portfolio through the “Khun Soo, EXIM Chuay (You Fight, EXIM Helps)” measures, enabling borrowers affected by economic conditions to rehabilitate their businesses and effectively reduce debt burdens. The Bank’s non-performing loan (NPL) ratio stood at 3.66% as of the end of 2025, broadly unchanged from the previous year despite uncertainties facing the business sector. An allowance for expected credit loss was set aside at 17,139 million baht, resulting in a high NPL coverage ratio of 261.85%. Net profit for 2025 totalled 1,904 million baht.

“In promoting investment for the future, EXIM Thailand is committed to advancing Thai industries toward high-tech manufacturing and the green economy. As of the end of 2025, the Bank recorded 91,650 million baht in outstanding loans and commitments supporting sustainable investments such as clean energy, the circular economy, and greenhouse gas reduction technologies, accounting for 47.78% of total outstanding loans. This reflects EXIM Thailand’s role in helping businesses of all sizes upgrade their production processes to meet international standards and improve global market access,” Charat Rattanaboonniti remarked.

“In the social dimension, the bank recognises that strong communities are the backbone of the economy. Therefore, it focuses on capacity building, community empowerment, and knowledge sharing, fostering business growth and nurturing the next generation of entrepreneurs. In the corporate governance dimension, EXIM Thailand has adhered to strong governance principles since its inception, integrating them into every level of its operations while actively engaging employees, management, and the Board of Directors. The bank conducts all activities with transparency and fairness for all stakeholders, placing a strong emphasis on prevention and suppression of corruption,” he noted.

In empowering entrepreneurs, EXIM Thailand continues to develop both new and existing exporters for sustainable global growth through collaboration with the public sector, private sector, and academic institutions. A key initiative is the “EXIM 2X” programme, which has been designed to cover all dimensions of export business, from access to finance and risk management tools to international market penetration strategies, logistics management, and ESG-based business operations. The Bank also creates trade opportunities through business matching activities and various “Export Studio Programmes” throughout the year. These efforts have enabled a cumulative total of 25,036 entrepreneurs to enhance their capabilities.

EXIM Thailand recognises its role in promoting and supporting opportunities across the business, social, and public sectors. As a steadfast pillar of support, the bank remains dedicated to helping the economy navigate internal and external challenges, steering Thailand toward a future of strong, stable, and sustainable growth.

“EXIM Thailand stands ready to fulfil its role as an Export Co-pilot, enhancing liquidity and strengthening risk management to equip Thai exporters with the readiness and confidence to compete under the new global trade rules and to turn change into opportunities for sustainable growth,” President Charat Rattanaboonniti concluded.

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