Closing border checkpoints has had a greater economic impact than expected!

Although the impact on the overall national economy is limited, expected to affect GDP by around 0.2%, the trade impact is concentrated in six northeastern provinces bordering Cambodia. Businesses in these areas are directly affected and need to urgently find alternative markets to mitigate the damage.

It is estimated that if the situation drags on beyond three months, the trade damage could increase from 50 billion baht to as much as 80 billion baht per year. However, if the situation resolves within 10-20 days, it is still considered manageable. But if it prolongs, the risk will increase, especially the possibility that trading partners will switch to importing consumer goods from other countries instead, of which over 80% currently are imported from Thailand.

In terms of investment, most Thai businesses operating in Cambodia are in the consumer goods, agricultural, and energy sectors. The primary impact will be on the private sector, and it has not yet affected the overall Thai economy. However, the uncertainty of the situation may lead some foreign companies to consider relocating their production bases back to Thailand, although no decision has yet been made by major operators.

Labor issues are another significant challenge, as there are as many as 700,000 to 800,000 Cambodian workers in Thailand annually. Without appropriate replacement mechanisms, this could negatively impact the service and industrial sectors that heavily rely on foreign labor.

For the tourism sector, the impact of the border situation is still limited to certain areas, such as the eastern border provinces. Meanwhile, the more significant impact on overall tourism comes from other factors, such as the flooding in the south, which has led to a substantial decrease in tourists from neighboring countries and has had a greater economic impact than the direct border situation.

Meanwhile, people in the six border provinces continue to be affected in their livelihoods. Some have had to evacuate periodically, and a number of children have been impacted by school closures during periods of tension. This has created a need for the situation to de-escalate quickly in order to return to normalcy.

From a proposal perspective, this situation could present an opportunity to address transnational crime, particularly online fraud networks that cause tens of billions of baht in economic damage annually and affect many countries worldwide. This would help enhance long-term economic confidence and stability, alongside resolving border issues.

Data source: Thansettakij