This study, “Economic and Social Externalities of Interstate Conflict: A  Study of the Economic and Social Fallout from the Thailand-Cambodia  Conflict in 2025,” provides a broad assessment of the economic and  social impacts resulting from restricted border skirmishes between Thailand and Cambodia which began in July 2025. The analysis of this  study quantifies the immediate, indirect, and induced economic costs  stemming from border closures, labor repatriation, and trade  restrictions. 

The findings indicate that economic losses are accumulating rapidly,  with Thailand alone experiencing an estimated THB 24.060 billion  (USD 740.31 million) in monthly economic losses. These losses will  be broadened and deepened, economically and socially. The blunt of the impact will be especially felt by the local businesses and populations of both Thai and Cambodia along the common border. 

These losses consist of direct economic impacts of THB 16.257 billion (USD 500.21 million) per month. The most significant losses arise from the collapsed cross-border trade, reduced output due to repatriated labor, unplanned government expenditures on security  and relief, and a decline in travel and tourism revenues. 

In addition, indirect and induced impacts, totaling around THB 7.80 billion (USD 240.09 million) per month, have intensified the overall  economic disruption. Supply chain interruptions, contractions oflocal  businesses, disruptions to foreign investment, and potential long-term  changes in trade patterns and market behavior are contributing to these  cascading effects, which threaten the competitiveness and resilience  of affected sectors.  

Projections based on current conditions suggest cumulative losses  have reached THB 93.701 billion (USD 2.88 billion) over a period  of three months, approximately from August to October 2025.  

As time marches on, the loses would reach THB 241.96 billion (USD  7.44 billion) over one year. An important driver is the opportunity  foregone from the GDP multiplier effects of the income stream,  especially, from wages and remittances of the Cambodian labor force. Moreover, the prolonged conflict will inevitably lead to the rerouting of existing and the establishment of new supply chain  systems, new travel and tourist routes and destinations will be  created and new investment plans and decisions will be made. All of  this would incur significant unplanned expenses on the part of the  relevant businesses and their supply chain. It should be noted that  these costs will be foregone and cannot be retrieved. And, once the  conflict has died down, any efforts to restore business operations to  the status quo ante bellum would, over time, increase in an exponential  manner.  

These figures underscore the critical importance of restoring the  smooth flow of goods, labor, and tourism across the shared boundary.  Coordinated and proactive measures for mutual interests are  essential to safeguard the livelihoods of border communities, mitigate  long-term economic damage, and reinforce the confidence of  investors and business operators in the economic resilience and  stability of the two countries. 

Immediate attention and strategic action are therefore recommended to  enable an early economic recovery of the two countries and to ensure  their return to sustainable growth. The urgent and efficient  management of the labor market should be given priority, as the loss  of income of workers effects large number of small businesses,  communities and peoples on both sides of the border. This urgent step can take place without the need to wait until the boundary issues  have been resolved.