A Cambodian BM-21 multiple rocket launcher returns from the Cambodia-Thai border as Cambodian and Thai troops exchanged fire in a new round of clashes in Preah Vihear province on July 24, 2025.
Str | Afp | Getty Images
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.
Both countries exchanged fire across the border in multiple areas on Thursday after weeks of simmering tensions, with least 11 civilian deaths.
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 said 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.
How the conflict might play out
The United States, a treaty ally of Thailand, said early Friday that it was was “gravely concerned” by the situation, and urged an immediate cessation of hostilities.
But that may prove difficult. Chansambath Bong, Ph.D. candidate at the Strategic and Defence Studies Centre at the Australian National University, noted that the deployment of heavy military platforms such as Thailand’s F-16 fighters and Cambodia’s BM-21s in these clashes “indicates a conflict of higher intensity than before that can sustain and escalate over time, if not de-escalated effectively.”
The Thai army said in a Facebook post that Cambodia used BM-21 rocket systems in the conflict.
Bong also noted that “nationalism in both countries is at “a fever pitch,” making it very difficult for the two sides to find an off-ramp and de-escalate militarily. He does say, however, that the damage wrought by the fighting may encourage both sides to consider mutual de-escalation.
But ORF’s Baneerjee is more optimistic, saying that although a prolonged military standoff cannot be ruled out, a large-scale escalation remains unlikely. “Both Thailand and Cambodia have strong economic and political incentives to avoid a sustained conflict.”
She does caution, however, that while past conflicts point to eventual de-escalation, the current regional climate complicates the prospect of a quick resolution, citing tensions in the South China Sea and the Myanmar crisis.
