Thailand-Cambodia Crisis: Warning of a Major Economic Impact

Economists have warned of the serious consequences of a resumption of the border conflict between Thailand and Cambodia.

They pointed out that exports, tourism and the labor market could suffer due to the decline in consumption.

Thailand suspended the peace agreement with Cambodia, signed on October 26, 2025 in Malaysia, after the explosion on November 10 of a mine recently laid on Thai territory, which injured four soldiers.

One of them lost a leg — as did six other Thai soldiers in similar previous incidents.

See: Thailand–Cambodia: Peace agreement suspended after mine explosion

As with the other incidents, Cambodia denied involvement and claimed that these were mines dating back to the Cambodian civil war, while Thai authorities maintain that these are new mines laid in areas that have already been cleared of mines.

See: Mines: Thailand accuses, Cambodia denies, the evidence is overwhelming

Following this, exchanges of fire were reported on Wednesday, November 12, by both countries, and authorities indicated that there were civilian injuries.

See: Thailand–Cambodia: Exchange of fire and explosion, tensions rise again

Thai exports in danger: up to 130 billion baht lost

Poonyawat Sreesing, senior economist at the Economic Information Centre (EIC) of Siam Commercial Bank, stated:

"Around 130 billion baht of Thai exports to Cambodia, or 1% of the country's total shipments for next year, could be lost if border tensions continue.

During the third quarter, Thai exports to Cambodia decreased by 43% compared to the previous year, with cross-border trade falling by almost 100%, with most shipments being made by air or sea.

The employment and tourism sectors could be affected if border tensions escalate again following exchanges of fire between troops from both sides in the disputed area.

Nuttaporn Triratanasirikul, deputy director general of the Kasikorn Research Center, stated:

"Approximately half of Thailand's exports to Cambodia represent 1.6% of the country's total shipments; half of these have disappeared due to the closure of the borders between the two countries."

She estimated the damage to Thailand's GDP at 100 billion baht, citing government figures.

A labor market weakened by the departure of Cambodian workers

The tensions also have a direct impact on the workforce.

The supply of labor is threatened, because before the border conflict that broke out in the middle of the year, up to 500,000 Cambodian workers were employed in Thailand, particularly in the agricultural sector, the EIC noted.

A significant number of these workers then returned home.

"Cambodian workers represented 1% of the Thai labor market.

"The government has taken steps to ease the situation by seeking workers in countries such as Sri Lanka and extending visas for migrants from Burma, Vietnam and Laos," said Mr. Poonyawat.

Tourism and consumption are down in areas near the conflict

"Tourism in the southern part of the northeastern region could be affected, as tourists tend to avoid conflict zones," said Ms. Nuttaporn.

"The extent of the economic impact will depend on the duration of the recent outbreak of violence.

But in the short term, cross-border trade between Thailand and Cambodia, as well as spending and consumption in the affected areas, will be significantly impacted.

Trade negotiations with the United States are continuing despite tensions

These new clashes have not affected the ongoing trade negotiations between Thailand and the United States, said Trade Minister Suphajee Suthumpun.

"Trade talks between Thailand and the United States are progressing well and are not affected by international political issues," she said.

"Cambodia's actions violated the joint declaration and caused losses to Thailand."

Our government cannot accept such behavior, and no other government would be likely to tolerate it.

Ms. Suphajee stated that the United States understood the situation and would not use it as a pretext to delay or suspend trade negotiations.

During recent discussions with the US trade representative at the APEC meeting in South Korea, Washington reaffirmed its intention to separate political issues from trade issues and remains committed to concluding negotiations this year.

The United States reaffirms its confidence in Thailand as an economic partner

Ms. Suphajee and Finance Minister Ekniti Nitithanprapas held discussions with members of the US-ASEAN Trade Council at Government House on Tuesday.

"They see Thailand as a key player in the global supply chain and a market with strong potential," she said.

"American companies have welcomed Thailand's efforts to promote trade through market access negotiations and a free trade agreement."

According to Ms. Suphajee, the American private sector views tariff policy as both an opportunity and a challenge for American companies, especially those with production bases and supply chains in Thailand.

She stated that these American companies view Thailand as a vital production hub and a stable economic partner.

Both countries reaffirm their commitment to resolving the conflict peacefully.

Thailand and Cambodia have expressed their willingness to resolve their border conflict peacefully, following several exchanges of fire and an escalation since Bangkok unilaterally suspended the peace agreement.

Malaysian Prime Minister Anwar Ibrahim, who spoke with Anutin Charnvirakul and Hun Manet, offered Malaysia's mediation to revive the talks planned under the Kuala Lumpur agreement.

The two countries reaffirmed their commitment to restoring stability along the border, despite recent incidents — landmines, shootings and destruction in Si Sa Ket province.

This diplomatic dynamic could mitigate the economic risks highlighted by analysts.

The conflict is part of a historical dispute inherited from colonial maps, reactivated this year after several years of appeasement since the deadly clashes of 2011.

See: Thailand – Cambodia: Civilians sacrificed to protect call centers?

See also:

Crisis with Cambodia: Thailand ready to turn its back on the United States

Thailand-Cambodia conflict: areas banned from travel as of October 21, 2025

Thailand: Videos show Cambodian soldiers laying mines

Thailand: Cambodian soldiers spotted laying mines

Source: Bangkok Post