Cambodia’s Economy Reels After Border Clashes

PHNOM PENH – Three months after a ceasefire ended fighting with Thailand, Cambodia is still grappling with the economic fallout of its bruising border conflict. The clashes, which displaced more than a million civilians and forced nearly a million migrant workers to return home, have left deep scars on trade, labour and household incomes.

The government’s nationalist narrative of standing up to a “bullying neighbour” briefly rallied public sentiment, but the political dividend is fading as economic pressures mount.

Remittances from Cambodian workers in Thailand plunged by 37 per cent in 2025, stripping rural families of a vital lifeline. Many returnees remain jobless, despite official claims of re‑employment.

Fuel shortages have compounded the crisis. Cambodia once relied on Thailand for nearly a third of its petroleum imports, but that supply line was severed at the onset of hostilities. With only three weeks of reserves under normal conditions, the country is acutely vulnerable to shocks, especially amid soaring global energy prices.

Small businesses along the border tell of devastation. “It took me 20 years to build up my business and in the end, it’s all gone,” said Sim Srong, whose gas station was destroyed by airstrikes. Others, like Nhep Sarath, now face mounting microfinance debts after losing shops and livelihoods. Cambodia’s microfinance sector, already notorious for high interest rates and over‑indebtedness, has become a ticking time bomb.

The International Monetary Fund estimates GDP growth slowed to 4.8 per cent in 2025 and will dip further to 4 per cent this year. Construction and property markets, once buoyed by Chinese investment, have cooled sharply, while the garment industry faces stiff competition from Bangladesh and the threat of tariffs abroad.

Politically, the crisis has tested Prime Minister Hun Manet, still overshadowed by his father Hun Sen, who remains Senate President and Cambodia’s de facto power broker. Analysts warn that as nationalist fervour ebbs, economic hardship will shape public sentiment.

For Cambodia, the aftershocks of war are proving more enduring than the fighting itself. With households burdened by debt, jobs scarce, and fuel supplies uncertain, the country’s economic time bomb ticks louder by the day.

-2024-04-01