The conflict’s immediate consequence was the paralysis of trade at the vital Klong Luek-Poipet crossing. — Reuters
BANGKOK: The escalating border conflict between Thailand and Cambodia in 2025 has transcended a mere territorial dispute, morphing into a full-scale “economic, political and geopolitical war”.
The clashes have inflicted profound and deepening economic wounds on both nations, with the indefinite halt of cross-border trade and the dark prognosis for a multi-trillion-baht energy project threatening regional stability.
The conflict’s immediate consequence was the paralysis of trade at the vital Klong Luek-Poipet crossing, generating immense economic damage and disrupting established regional supply chains.
The crisis has simultaneously resulted in a severe shortage of Cambodian labour in Thailand and a catastrophic collapse of the border tourism sector following its designation as a “Conflict Zone”.
Tensions initially flared following skirmishes in the Emerald Triangle, quickly escalating into the “Five-Day War” between July 24 and 28.
The fighting caused at least 48 fatalities and forced over 300,000 civilians to evacuate from the border areas – violence levels that immediately destabilised the economic structures of both states.
A brief respite was offered by the signing of the Kuala Lumpur Peace Agreement on Oct 26.
However, the truce proved brittle, lasting less than two months before an insidious series of bombings and reciprocal accusations led the Thai government to declare, “Peace is over”.
This paved the way for aerial bombardments on Dec 8 and sustained armed confrontations along the 800-km frontier that continue to this day.
The indefinite closure of the Klong Luek-Poipet crossing, a crucial logistics hub, has completely stalled border commerce valued at approximately 174.5 billion baht per year (around US$4.7bil).
Thailand’s exports, particularly consumer goods, fuel, and construction materials – which are essential lifeblood for Cambodian production – have been cut off.
Conversely, Thailand’s manufacturing sector has suffered from the loss of crucial Cambodian raw materials, including cassava and scrap metal, creating a complex crisis for the starch, ethanol and steel industries.
According to the Centre for Economic and Business Forecasting at the University of the Thai Chamber of Commerce (UTCC), the direct trade damage is staggering.
In a scenario where the border remains shut for a full year, Thailand faces a loss of approximately 66.61 billion baht in exports and 20.37 billion baht in necessary imports.
The UTCC forecasts that Thai gross domestic product or GDP could contract by 0.74% in 2026.
Cambodia, which relies almost entirely on Thai capital goods, is simultaneously facing a severe inflationary spiral. — The Nation/ANN
