Maybank Assesses Economic Risks Amid Thailand-Cambodia Conflict
Tensions remain high along the 817km-long Thai-Cambodian border despite a ceasefire agreement reached on 28 July, with a large military presence still reported on both sides. The Thai military has accused Cambodian forces of violating the ceasefire terms, reigniting fears of renewed conflict. Defence officials from both countries are set to meet in Phnom Penh on 4 August in an attempt to defuse the situation.
While the ceasefire offers hope of de-escalation, analysts warn that the broader impact on both economies could be significant if tensions persist.
Trade, Tourism and Labor at Risk
Cambodia is particularly vulnerable due to its reliance on Thailand for trade, energy, and tourism. In 2024, nearly a third of Cambodia’s petroleum fuel imports came from Thailand, and Thailand accounted for 32% of its 6.7 million international tourist arrivals—many of whom frequent the country’s border casinos.
Thailand, on the other hand, depends heavily on Cambodian migrant labor. While the official number of Cambodians working in Thailand is 500,000, informal estimates suggest the real figure could be as high as two million—roughly 4–5% of Thailand’s labor force. Cambodian workers are especially critical in Thailand’s construction (25%), agriculture (20%), and food processing (18%) sectors.
Thai authorities have already implemented contingency plans to ensure affected workers can remain in the country legally and continue working.
Economic Fallout if Tensions Escalate
According to Maybank Research, the economic damage from the conflict could remain limited if the ceasefire holds. Thailand’s GDP is projected to grow by 2.3% in 2025, while Cambodia’s economy is expected to expand by 5%. However, sectors linked to tourism and consumer spending in Thailand—such as hospitality, retail, and air travel—are likely to see the most immediate impact.
Tourist arrivals in Thailand are now forecast to drop to 32.2 million in 2025, down 5% from previous expectations and 9% lower than in 2024. Cambodia is also expected to miss its tourism target, with total visitors revised down to 6.4 million—5% less than last year. The country’s casino industry, particularly near the Thai border, is likely to take a disproportionate hit.
In the event of a worst-case scenario—where the ceasefire collapses and conflict drags on through the end of the year—Maybank estimates Thailand’s GDP could shrink by an additional 0.7 percentage points, while Cambodia’s economy could lose as much as 2 percentage points in the second half of 2025 alone.
As regional tensions continue to simmer, all eyes are on the upcoming talks in Phnom Penh, which may determine whether Southeast Asia’s fragile peace can hold, or give way to deeper disruption.
