Tourism sector braces for impact of border spat
After a week of deadly clashes and a ceasefire agreement by the two countries on Sunday, the Royal Thai Army reported continued attacks in disputed areas with Cambodia on Wednesday.
A statement from the Foreign Affairs Ministry also indicated Thai military positions at Phu Makua in the northeastern frontier area came under attack from small arms fire and grenade assaults by Cambodian forces from late Tuesday night into Wednesday morning.
The apparent border skirmishes more than 24 hours after the ceasefire went into effect highlight the difficulty civilian authorities face in enforcing the truce on the ground.
Teerasak Tanavarakul, head of research at CGS International Securities (Thailand), said when the truce was announced two days ago, it raised hopes and eased concerns about the disputed areas.
"If Thailand cannot completely cease hostilities at the border with Cambodia in a week or two, foreign tourists will question the effectiveness of the ceasefire agreement and their own safety," he said.
Mr Teerasak said he doubted whether the General Border Committee meeting scheduled for Aug 4 in Cambodia would occur.
"If that meeting is not convened to ease tensions, tourist confidence would undoubtedly be hurt," he said.
Kuala Lumpur-based Maybank Securities said after an "immediate and unconditional" ceasefire on July 28, the border situation reflects "an uneasy peace".
According to Maybank, Cambodia is dependent on Thailand for trade, fuel and tourists, while Thailand is dependent on Cambodian workers. Officially half a million Cambodians work in Thailand, although informal estimates put the number closer to 2 million, almost 5% of Thailand's labour force.
"If the ceasefire holds, the impact of the conflict on economic growth should fade in the next two months. Sectors related to tourism and domestic consumer spending, including hotels, retail and air transport, will be more affected," the brokerage said in a research note on Wednesday.
In a worst-case scenario where the ceasefire fails to hold for the rest of the year, the conflict may shrink Thai GDP growth by 0.7 percentage points and Cambodian GDP by 2 percentage points for the second half of 2025, noted Maybank.
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