Abstract/Summary

This report assesses the economic consequences of the 2025 Cambodia-Thailand border closure using GTAP-FIN, a dynamic global computable general equilibrium (CGE) model. The model is calibrated to the GTAP v11c database and a baseline projection for 2018–2040 that incorporates observed and projected macroeconomic trends, demographic change, and tariff developments. Border-closure impacts are modelled through five channels: labour mobility, remittances, bilateral trade, tourism, and investment. Three scenarios are considered, representing light, moderate, and severe disruptions. The results show that the border closure generates economy-wide effects extending well beyond bilateral trade. Under the moderate scenario, real GDP and employment are approximately 1.5 percent and 3.9 percent above baseline by 2030. These gains reflect the return of Cambodian workers from Thailand, thereby expanding the domestic labour force and raising aggregate production. However, the increase in population and labour supply masks broader welfare losses. Real GDP per capita declines by around 1.0 percent, while real consumption per capita falls by about 5.4 percent relative to baseline. Reduced remittances, lower tourism activity, weaker trade flows, and lower investment offset much of the benefit associated with a larger workforce and place sustained pressure on household incomes. The findings suggest that aggregate growth indicators alone may understate the economic costs of border disruptions. Policy responses should therefore focus not only on absorbing returning workers but also on strengthening household incomes and economic resilience. Priorities include expanding productive employment opportunities, diversifying export markets and tourism sources, supporting private investment, and reducing dependence on external income sources.

DOI: https://doi.org/10.64202/rr.202609