- 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’s, may suffer more, they said.
Both countries’ tourism-dependent economies may suffer from the growing tension between Thailand and Cambodia, but analysts believe Cambodia’s is more at risk.
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Following weeks of simmering tensions that resulted in at least 11 civilian deaths, both nations exchanged gunfire across the border in various locations on Thursday.
In 2024, tourism will account for over 12% and 9% of Thailand’s and Cambodia’s GDP, respectively, making it a major economic engine for both nations.
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In 2024, Thailand attracted almost 35 million tourists, compared to 6.7 million in Cambodia.
According to Sreeparna Banerjee, associate research fellow at the Observer Research Foundation, “Thailand, where tourism… supports a large segment of the workforce, remains highly exposed to perceptions of instability,” she told CNBC on Friday.
According to her, even brief disturbances close to the border have the potential to trigger travel advisories and undermine visitor trust, which is “particularly damaging in a year when Thailand is banking on strong tourism-led recovery.”However, Banerjee stated that although while tourism makes up a smaller portion of Cambodia’s GDP, it would be “misleading” to believe that the nation is less susceptible to interruptions in the industry.
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“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 stated.
The skirmishes, which include artillery fire and Thailand deploying an F-16 fighter jet, follow Thailand’s expulsion of Cambodia’s ambassador from Bangkok and its recall of its ambassador to Phnom Penh on Wednesday.
Both parties downgraded their diplomatic ties in response to the claimed injury of another Thai soldier by a landmine near the disputed territory.
Although Cambodia has denied the charges, Bangkok has claimed that Cambodian troops buried the landmines recently.
The killing of a Cambodian soldier on May 28 in the disputed “Emerald Triangle,” which is where the borders of Thailand, Cambodia, and Laos intersect, served as the catalyst for the most recent escalation.
While analysts believe that Cambodia is in a weaker position, they also admitted that the tensions may have a detrimental economic impact on Thailand.
According to Joshua Kurlantzick, senior fellow for Southeast Asia and South Asia at the Council on Foreign Relations, the conflict will have “minimal impact” on Thailand’s economy because the tourist destinations are located far from the border conflicts.
He emphasized that places like Bangkok and Chiang Mai are home to the great bulk of tourists.Bangkok and Phuket were Thailand’s two most lucrative tourist destinations in 2024, according to travel website The Vacationer. Phuket is even farther from the border than Bangkok, which is roughly 260 kilometers away.
Cambodia will lose more, according to Kurlantzick, who pointed out that the nation already has a larger base of repeat visitors than Thailand and is perceived as more unstable and hazardous.
Similarly, Cambodia’s tourism industry will be more impacted, Kasem Prunratanamala, head of Thailand research at CGS International Securities (Thailand), told CNBC on Friday.
According to him, this is because a “significant” number of Thai people cross the border to gamble in Cambodia, something that is no longer possible due to the border closure.
On the contrary, “the Thai provinces near the Cambodia border are generally not tourist destinations, even for domestic travellers,” he stated.
Thailand’s treaty ally, the United States, declared early Friday that it was “gravely concerned” about the situation and demanded an immediate end to hostilities.However, that can be challenging. The use of heavy military platforms like Thailand’s F-16 fighters and Cambodia’s BM-21s in these conflicts “indicates a conflict of higher intensity than before that can sustain and escalate over time, if not de-escalated effectively,” according to Chansambath Bong, Ph.D. candidate at the Strategic and Defence Studies Centre at the Australian National University.In a Facebook post, the Thai army claimed that Cambodia had employed BM-21 missile systems throughout the battle.
Additionally, according to Bong, “nationalism in both countries is at a fever pitch,” which makes it extremely difficult for the two sides to find a way to de-escalate with a military force. However, he acknowledges that the harm caused by the conflict can persuade both sides to think about de-escalating their conflict.
Baneerjee of ORF, however, is more upbeat, stating that while a protracted military standoff cannot be completely ruled out, a significant escalation is still unlikely. “Both Thailand and Cambodia have strong economic and political incentives to avoid a sustained conflict.”
Noting tensions in the South China Sea and the Myanmar issue, she does warn that although previous wars suggest a de-escalation in the future, the current regional environment makes a speedy resolution unlikely.
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