Thai-Cambodia Border Fighting Poses Minor GDP Risk, But Tourism and Political Uncertainty Loom, Says KKP Economist

Economist suggests Thai GDP insulated from direct border conflict but warns that trade disruption and combined tourism concerns pose the greater economic risk.

The recent flare-up of conflict along the Thai-Cambodian border is expected to have only a marginal direct impact on Thailand’s overall Gross Domestic Product (GDP), according to an analysis by Pipat Luengnaruemitchai, an economist at Kiatnakin Phatra Securities (KKP).

While the direct economic effect is considered minor, Pipat highlighted that the primary concern stems from the disruption to the flow of goods and the potential cumulative damage to the vital tourism sector.

During a press briefing on Monday, the economist pointed out that trade disruption is the most immediate economic channel affected by the border tensions. 

Thai exports to Cambodia account for approximately two to three per cent of Thailand's total exports, with around 70 per cent of that value representing border trade.

Crucially, Pipat suggested that since the border crossing had already been subject to closures for a period, the most recent fighting may not significantly worsen the existing disruption to trade volumes.
 

A more significant long-term concern, according to the KKP assessment, is the potential negative effect on Thailand’s tourism industry. 

The instability caused by the border fighting, which has occurred in the Northeast/East near high-season tourist provinces, combined with domestic issues such as recent flooding in the South, creates a combined climate of uncertainty. 

This overall instability, the economist cautioned, could dampen international tourist interest in visiting the country.

Beyond immediate economic metrics, the situation also introduces significant political and trade uncertainty. 

Pipat expressed reservations regarding how the border event might influence pending diplomatic matters. 

Specifically, he questioned the impact on previously decided government actions, such as the suspension of a peace accord and the potential consequences for ongoing trade negotiations with other nations.

The full extent of the financial ramifications has yet to be calculated, as the economist noted that they had not yet factored the latest fighting into their official numbers.