Thailand-Cambodia border clashes: Cambodia's economy has more to lose, analysts say

• Tourism is a significant economic driver for both countries, contributing about 12% and 9% to Thailand's and Cambodia's gross domestic product, respectively, in 2024.
• Analysts note, however, that Thailand's tourism spots are far from the border clashes.
• Cambodia's tourism industry, being less established than Thailand, may suffer more, they said.

The escalating conflict between Thailand and Cambodia could have a negative impact on their tourism-dependent economies, but Cambodia's is more vulnerable, analysts said.

Tourism is a significant economic driver for both countries, contributing about 12% and 9% to Thailand's and Cambodia's gross domestic product, respectively, in 2024.

Thailand received more than 35 million tourists in 2024, while Cambodia welcomed 6.7 million.

“Thailand, where tourism ... supports a large segment of the workforce, remains highly exposed to perceptions of instability,” according to Sreeparna Banerjee, associate research fellow at the Observer Research Foundation, told CNBC on Friday.

She said even short-term unrest near the border can result in travel warnings and erode tourist confidence, which is “particularly damaging in a year when Thailand is banking on strong tourism-led recovery.”

But although tourism contributes less to Cambodia's gross domestic product, it would be “misleading” to assume that the country is less vulnerable to disruptions to the sector, Banerjee said.

“Unlike Thailand, Cambodia has fewer policy tools—such as tourism promotion boards, large-scale fiscal reserves, or robust social safety nets—to cushion the blow,” she added.

The clashes — which involve artillery fire and Thailand mobilizing an F-16 fighter jet — come after Thailand recalled its ambassador on Wednesday to Phnom Penh and expelled Cambodia's envoy in Bangkok.

That was a response to another Thai soldier allegedly being injured by a landmine along the disputed area, with both sides downgrading their diplomatic relations.

Bangkok has alleged that the landmines were newly laid by Cambodian troops, although Cambodia has rejected the claims.

The recent escalation was sparked by the killing of a Cambodian soldier on May 28 in the so-called “Emerald Triangle,” a disputed area where the borders of Thailand, Cambodia and Laos meet.

Cambodia more to lose?

Analysts acknowledged the negative economic impact that the tensions might have on Thailand, but are in agreement on Cambodia's weaker position.

The conflict will have a “minimal impact” on Thailand's economy, as the country's tourist areas are far from the border clashes, said Joshua Kurlantzick, senior fellow for Southeast Asia and South Asia at the Council on Foreign Relations.

He pointed out that the vast majority of tourism is concentrated in areas such as Bangkok and Chiang Mai.

According to travel site The Vacationer, Bangkok and Phuket were the two regions in Thailand that received the most tourist revenue in 2024. Bangkok is about 260 kilometers from the border, and Phuket even farther.

Kurlantzick did say, however, that Cambodia will have more to lose, noting that the country is already viewed as more unstable and dangerous than Thailand, and does not have the large base of recurring tourists that Thailand enjoys.

Likewise, Kasem Prunratanamala, head of Thailand research at CGS International Securities (Thailand), told CNBC on Friday that Cambodia's tourism sector will be affected more.

That's because there is a “significant” number of Thais crossing the border to gamble in Cambodia, which can no longer happen because of the border closure, he said.

On the other hand, “the Thai provinces near the Cambodia border are generally not tourist destinations, even for domestic travellers,” he added.