Cambodia–Thailand Trade Weakens Sharply Amid Border Tensions

Economic

Summary:

Cambodia's imports from Thailand plunged 29.1% in August 2025 year-on-year, driven by escalating border tensions. Total bilateral trade in the first eight months reached $2.6 billion, reflecting a 6.4% decline....

Decline In Cambodia’s Imports From Thailand Signals Strained Trade Ties

According to the General Department of Customs and Excise (GDCE) of Cambodia, the total value of Cambodian imports from Thailand in August 2025 fell sharply to approximately $213 million, representing a year-on-year contraction of 29.1% from the $301 million recorded in August 2024. Cambodian exports to Thailand also dropped significantly by 36.2% to only $46 million in the same month, underscoring the mutual impact of deteriorating trade conditions between the two neighboring countries.

The month-to-month comparison does offer a slightly less pessimistic view. Compared to July 2025, when Cambodia imported only $166 million worth of goods and exported just over $40 million to Thailand, the August figures show mild recovery. However, these short-term fluctuations are overshadowed by broader systemic issues.

Border Conflicts and Political Friction Undermining Trade

The continuous trade downturn is strongly correlated with heightened political friction and cross-border instability. Thailand's unilateral decision to shut down its border with Cambodia due to ongoing conflict has directly contributed to the shrinking trade volume. While the causal connection is evident, the broader consequence is a disruption of routine supply chains and a weakening of investor and trader confidence in bilateral logistics.

The trade imbalance remains notable: in the January–August 2025 period, Cambodia exported goods worth over $534 million to Thailand, whereas imports from Thailand reached $2.1 billion. This disparity, while not new, has become more structurally significant as Cambodia becomes increasingly reliant on Thai goods while losing competitive edge in exports.

Broader Trade Picture Shows Resilience

Despite the bilateral slowdown with Thailand, Cambodia’s overall trade performance in the first eight months of 2025 remained positive. GDCE data reveals total trade volume reached $42.15 billion, increasing 15.5% year-on-year. Export performance was also robust, with a 14.8% increase totaling $20.18 billion. These figures suggest that while the Cambodia–Thailand trade corridor is faltering, Cambodia has been able to diversify its external trade portfolio.

The United States remained Cambodia’s largest export destination, with shipments valued at $8.3 billion, up 23.2% from the same period in 2024. Vietnam followed with $2.7 billion (up 11.5%), while China and Japan both exceeded the $1 billion mark. Spain also emerged as a substantial market, absorbing over $770 million worth of goods.

Export Structure Remains Dominated By Manufacturing and Agriculture

Cambodia’s exports continue to be led by labor-intensive sectors such as garments, footwear, travel products, and leather goods, alongside rising contributions from furniture, rubber, and agricultural products. Machinery and electrical equipment have also started gaining traction. This sectoral composition has supported overall export growth, although political and logistical vulnerabilities continue to pose a structural risk, particularly in regional trade corridors such as that with Thailand.

The significant decline in trade between Cambodia and Thailand in August 2025 marks more than a short-term fluctuation. It reflects escalating geopolitical tensions that have disrupted one of Cambodia’s key trade relationships. While Cambodia’s broader trade performance remains resilient due to strong links with the US, Vietnam, and other partners, restoring stability along the Thai border is critical to sustaining long-term regional trade growth. The data underscores a clear causal link between border closures and trade declines, reinforcing the need for diplomatic and logistical resolution to safeguard economic continuity.

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Gerik

Economic

A Crisis Like No Other: Global Synchronization in Economic Shutdowns

The COVID-19 pandemic marked the first economic crisis in modern history where nearly every country on the planet 197 in total was forced to deploy support measures simultaneously. According to the World Health Organization, the virus claimed 1.8 million lives and infected over 80 million people globally in its first year, affecting even the remote continent of Antarctica.

Unlike previous crises driven by financial system weaknesses, the COVID-19 downturn was sparked by a deliberate shutdown of economic activity to protect public health. The root cause was not overleveraging or debt accumulation, but rather a health emergency that compelled governments to halt production, consumption, and trade. This triggered a severe and sudden disruption to both demand and supply chains, shaking the global economy at its core.

Market Shock Amid an Overheated Pre-Pandemic Cycle

Before the pandemic, stock markets especially in the United States were riding high on more than a decade of ultra-low interest rates following the 2008 global financial crisis. Cheap borrowing had pushed equity valuations to record highs. When COVID-19 struck, markets plummeted. The Dow Jones Industrial Average recorded nine of its ten largest single-day losses during the early months of the pandemic, making this one of the most volatile periods in financial history.

The causal link between the shutdown and market panic was direct. Unlike debt-driven crashes where economic indicators degrade gradually, the COVID shock was instantaneous, reflecting the fragility of markets built on sustained liquidity but not prepared for total economic immobilization.

Rapid and Coordinated Policy Response: Fiscal and Monetary Firepower

Central banks worldwide activated an extensive range of emergency measures rate cuts, asset purchases, and liquidity injections. But monetary policy alone could not stabilize the situation. For the first time in decades, fiscal policy took center stage.

By March 2020, massive fiscal stimulus packages were announced across major economies. The International Monetary Fund tracked interventions across all 197 countries, covering everything from direct cash transfers to job retention schemes, business bailouts, and credit support programs. Governments moved with unusual speed and magnitude, recognizing the scale of systemic risk.

U.S. and China Lead the Response with Divergent Strategies

In the United States, the response came in the form of the CARES Act, enacted on March 27, 2020. It was the largest stimulus package in American history, deploying $2 trillion in federal funds to support households, businesses, and financial markets. For comparison, the stimulus passed during the 2008 crisis was just $800 billion. Americans received stimulus checks starting April 11, though political symbolism slowed distribution, as then-President Donald Trump insisted on printing his name on the checks.

China took a slightly different route. It announced a 3.75 trillion yuan ($574 billion) spending plan focused on pandemic relief and an additional 100 billion yuan ($15 billion) for infrastructure upgrades. Notably, China also made the unprecedented move of not setting a GDP growth target for 2020 the first time since the country’s founding in 1949. This decision reflected the uncertainty and volatility surrounding the pandemic’s economic fallout.

Long-Term Lessons from a Global Economic Stress Test

The pandemic has revealed the strengths and limitations of global economic governance. First, it showed that fiscal policy can be deployed swiftly and at scale when political consensus exists. Second, it underscored the necessity for cross-sector coordination between monetary and fiscal bodies, public health systems, and international institutions.

A key lesson lies in the divergence between public health imperatives and economic continuity. Governments learned that long-term economic stability may require short-term economic sacrifice, and that protecting lives could ultimately protect livelihoods. This is a shift in policy philosophy, emphasizing human capital as a foundation for economic recovery.

Moreover, the pandemic has redefined the concept of “crisis contagion.” No country was immune, and interdependence once viewed as purely beneficial became a vulnerability. Supply chain disruptions, energy shortages, and vaccine nationalism exposed the limits of globalization and sparked debates about resilience, local production, and strategic autonomy.

A Crisis That Rewrote Economic Orthodoxy

COVID-19 was not just a health crisis; it was a stress test for the global economic system. It challenged long-held assumptions about fiscal prudence, government intervention, and the pace of market correction. The synchronized global response both in policy and in market reactions highlighted how interconnected the world has become, and how fragile that system can be under external shocks.

The crisis did not eliminate global inequalities or institutional weaknesses, but it provided a blueprint for crisis response in the 21st century. As the world looks toward future shocks whether from climate, geopolitical conflict, or future pandemics the economic lessons of COVID-19 remain urgent and invaluable.

To stay updated on all economic events of today, please check out our Economic calendar

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Gerik

Economic

Stocks

The Paradox of Growth Amidst Weakness

U.S. equity markets are defying traditional economic logic. In recent months, economic signals have grown increasingly bleak rising unemployment, shrinking consumer confidence, mounting federal deficits, and inflation that remains stubbornly high. Yet, stock indices such as the S&P 500 have surged more than 12% year-to-date, brushing up against all-time highs.

This seeming disconnect reflects not a detachment from economic reality, but a calculated response to it. Investors are reinterpreting weakening economic data as a signal for monetary easing. The Federal Reserve is widely expected to pivot toward interest rate cuts, a move that would lower borrowing costs and inject renewed liquidity into the financial system.

Monetary Policy Expectations Drive Market Optimism

Investors are betting that the deteriorating job market and softening macro data will compel the Federal Reserve to act decisively. Although inflation remains elevated at 2.9% year-on-year partly due to recent tariff hikes under President Donald Trump the market increasingly anticipates that the Fed will prioritize economic stabilization over inflation control, at least in the short term.

There is a causative relationship here. Weak labor market data reduces the likelihood of a rate hike and increases the probability of a rate cut. Investors are not simply reacting to macro weakness they are anticipating that this weakness will prompt policy action beneficial to equities, particularly in interest-rate-sensitive sectors.

Rob Haworth of U.S. Bank summarizes this sentiment, noting that the data is being interpreted not as recessionary, but as sufficiently soft to justify easing without triggering panic. The Fed, therefore, becomes the central actor in this narrative not because it has taken action, but because markets believe it will.

Sectoral Reactions and the AI Supercycle

The prospect of lower rates has already buoyed sectors heavily reliant on cheap capital. Homebuilders such as DR Horton and Lennar have posted double-digit gains in the past month. The Russell 2000 index, composed primarily of small-cap stocks sensitive to domestic interest rate shifts, has gained 5%.

However, the most powerful engine behind the rally is technology especially companies tied to artificial intelligence. The AI sector is demonstrating not just growth, but a fundamental restructuring of business models. Oracle’s shares jumped 22% after announcing a $300 billion cloud deal with OpenAI. Palantir has quadrupled in value over the past year by capitalizing on enterprise demand for AI-driven operational transformation. Meanwhile, tech giants like Microsoft, Alphabet, and Nvidia have each risen more than 50% since March.

Ross Mayfield of Baird Private Wealth Management argues that the performance of the AI sector is overshadowing broader economic weakness. The ability of these companies to “do more with less” by deploying AI to reduce labor dependence is directly increasing margins and fueling earnings.

The Risk of Overexuberance

Still, some economists warn that market sentiment may be outpacing reality. Diane Swonk of KPMG cautions that the current AI optimism could be sowing the seeds of a future bubble. Historically, every major wave of technological innovation has brought speculative excess.

This suggests a potential correlation, if not causation, between investor euphoria and price inflation in tech equities. The risk is that if the Fed does not cut rates as aggressively as expected or if earnings fail to keep pace with valuation expansion the market could face a significant correction.

Michael Farr, of Farr, Miller & Washington, points out that investors are currently pricing in as many as five rate cuts before year-end, even though the Fed has signaled only two. Any deviation from this expectation could trigger repricing, especially for already overvalued stocks.

Fragile Confidence Built on Anticipation

The sustained rise in U.S. stock prices amidst economic slowdown is not irrational it is contingent. It hinges on the belief that monetary policy will shift, that AI will continue to transform profitability, and that market resilience can outpace consumer anxiety and macro volatility.

But the gap between investor expectations and policy reality remains precarious. As long as interest rate cuts remain a forecast, not a fact, and as long as AI earnings continue to justify their hype, the rally can sustain itself. Yet, should either of these pillars falter, the market’s optimism could quickly reverse, exposing the fragility beneath its current strength.

To stay updated on all economic events of today, please check out our Economic calendar

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Manuel

Commodity

Political

The US will urge its allies in the Group of Seven to impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince President Vladimir Putin to end his war in Ukraine.

President Donald Trump said on Friday that his patience with Putin was “running out fast” and threatened new economic sanctions. “It’ll be hitting very hard on with sanctions to banks and having to do with oil and tariffs also,” he said in an interview on Fox News.

The US will also tell the G-7 countries they should create a legal pathway to seize immobilized sovereign Russian assets and consider seizing or using the principle of those assets to fund Ukraine’s defense, according to a US proposal seen by Bloomberg. The vast majority of the about $300 billion of Moscow’s immobilized assets are in Europe.

Brent crude futures extended gains following the report, briefly touching a session high, and closed up 0.8%. The euro fell to the day’s low, while trading little changed late in the New York session Friday, at around the $1.1734.

A spokesperson from the White House didn’t immediately respond to a request for comment on the proposals.

Separately, senior US officials have floated with European counterparts the idea of gradually seizing those frozen Russia assets to increase the pressure on Moscow to enter into negotiations, according to people familiar with the matter who spoke on the condition of anonymity.

Profits generated by the assets are currently being used to provide loans to Ukraine.

Canada, which holds the presidency of the G-7, convened a meeting of the group’s finance ministers on Friday to “discuss further measures to increase pressure on Russia and limit their war machinery,” according to a statement.

Treasury Secretary Scott Bessent, in that “emergency” G-7 discussion, reiterated Trump’s call to the group that “if they are truly committed to ending the war in Ukraine, they should join the United States in imposing tariffs on countries purchasing oil from Russia,” according to a statement from the Treasury.

Bessent and US Trade Representative Jamieson Greer welcomed commitments to “explore using immobilized Russian sovereign assets to further benefit Ukraine’s defense,” the US Treasury statement also said.

The US proposal calls for 50% to 100% secondary tariffs on China and India as well as restrictive trade measures on both imports and exports to curb the flow of Russian energy and to prevent the transfer of dual-use technologies into Russia, according to the proposal.

The proposal poses a challenge given that several nations in the EU, including Hungary, have blocked more stringent sanctions targeting Russia’s energy sector. Such measures would require the backing of all member states.

Trump has told European officials he’s willing to impose sweeping new tariffs on India and China to push Putin to the negotiating table with Ukraine — but only if nations in Europe do so as well. US Urges G-7 Sanctions on Russia Oil as Trump Loses Patience_1

US Urges G-7 Sanctions on Russia Oil as Trump Loses Patience_1

Trump made the ask when he called into a meeting with senior US and European Union officials in Washington this week and said the US would be willing to mirror tariffs imposed by Europe on either country, Bloomberg reported earlier.

Trump’s suggestion comes after his deadline for Putin to hold a bilateral meeting with Ukraine’s Volodymyr Zelenskiy passed without indication that the Russian leader was genuinely interested in engaging in face-to-face peace talks. Instead, Moscow has stepped up its Ukraine bombing campaign.

Russia on Friday said negotiations with Ukraine were on “pause” despite Trump’s push following a meeting with Putin last month for direct talks between the Russian leader and Zelenskiy.

The proposal to the G-7 also seeks sanctions targeting Russia’s so-called shadow fleet of oil tankers and the networks that enable the trades to flow; the Russian oil company Rosneft PJSC; and a prohibition of insurance for maritime services.

The US will also call on its allies to sanction entities supporting Russia’s military industry; Russian regional banks; prohibit services related to artificial intelligence and financial technology in Russian Special Economic Zones, according to the proposals.

Trump has so far refrained from imposing direct sanctions on Russia, despite skating through several self-imposed deadlines and Putin’s continued reluctance to negotiate an end to the war. Trump has, however, doubled tariffs on India to 50% over its continued purchase of Russian oil.

The G-7 discussions come as the EU is working on a 19th package of sanctions, which is expected to target more Russian banks and the country’s oil trade, Bloomberg previously reported.

Source: Bloomberg

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Manuel

Cryptocurrency

Prediction market Polymarket is pursuing new funding that could boost its valuation to $10 billion, as Business Insider reported on Sept. 12.

Two people with knowledge of the matter said the valuation discussions represent at least a threefold increase from the $1 billion Polymarket achieved in a funding round that closed this summer.

According to one source, at least one investor offered a term sheet valuing the company at $10 billion. A Polymarket spokesperson declined to comment on the funding talks.

Strategic developments

The reported valuation surge follows a series of strategic developments positioning Polymarket for a US comeback.

The Commodity Futures Trading Commission granted regulatory approval for the platform to resume US operations through a no-action letter issued Sept. 3 to QCX LLC, Polymarket’s regulatory partner, acquired for $112 million in July.

The regulatory greenlight enables Polymarket to operate event contracts while maintaining compliance with federal derivatives regulations. It also marks a return after the platform ceased US operations in 2022 following a $1.4 million CFTC settlement over unregistered derivatives trading.

Additionally, Donald Trump Jr. joined Polymarket’s advisory board in August as his venture capital firm 1789 Capital made a strategic investment in the platform.

The partnership adds political expertise as Polymarket prepares for US market entry. Trump Jr. recently praised the platform for cutting through “media spin and so-called expert opinion.”

Polymarket CEO Shayne Coplan characterized the 1789 Capital partnership as reinforcing the company’s role as a trusted information source, while the firm’s founder, Omeed Malik, praised Polymarket’s intersection of financial innovation and free expression.

Slump in user growth

Polymarket operates as a prediction market where users place bets on outcomes ranging from political elections to cultural events, generating market-driven predictions.

Data from a Dune dashboard by Varrock founder Richard Chen shows that Polymarket crossed $8.5 billion in year-to-date trading volume as of Sept. 12, surpassing last year’s total volume.

The trading volume increase occurs despite a slump in active and new users. Polymarket’s monthly active traders peaked in January at 454,664, gradually falling to reach August’s 226,442 after a 20% fall from July.

Meanwhile, new users plunged 33% between July and August, reaching 66,160, the lowest level in a year.

The platform’s regulatory preparations and high-profile advisory additions position it for a potential pivot in these numbers with a US expansion.

Source: Cryptoslate

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Manuel

Central Bank

Political

U.S. Treasury Secretary Scott Bessent met with BlackRock Inc (BLK) executive Rick Rieder in New York on Friday, as the Trump administration continued its search for a new chair for the Federal Reserve, a source familiar with the matter said.

Bessent has now spoken with four of the 11 candidates on the administration's list of candidates to replace Fed chair Jerome Powell, whose term expires in May, the source said.

Bloomberg first reported Bessent's meeting with Rieder, BlackRock's CIO of fixed income, and called him a rising contender for the post. The two met for two hours and discussed monetary policy, the Fed's organizational structure and regulatory policy, it said.

President Donald Trump had told reporters at the White House a week ago that his short list for the job included his aide Kevin Hassett, former Fed Governor Kevin Warsh and current Fed Governor Christopher Waller.

At the time, Trump said he had eyed Bessent for the job, but the Treasury secretary declined.

Bessent has said he will meet with the candidates to whittle down the list and present Trump with a list of top contenders.

Trump has made clear he intends to install a Fed leader more aligned with his push for rapid interest-rate cuts after months of railing against Powell for being "too late" to lower interest rates and bring down borrowing costs.

Powell's Fed has kept rates on hold all year on concern that Trump's tariffs could reignite inflation, although his concerns have shifted recently to focus more on the slowing labor market.

The U.S. Senate is slated to vote on Monday to confirm White House Council of Economic Advisers Chair Stephen Miran to the Fed, which starts a two-day meeting Tuesday at which it is expected to cut its policy rate by a quarter of a percentage point. Miran will retain his White House job, but take an unpaid leave while at the Fed.

Miran would replace Adriana Kugler, who was appointed by former President Joe Biden and resigned as Fed governor last month.

Trump has sought to fire another Fed governor appointed by Biden, Lisa Cook, but that move has been blocked for now by a federal judge.

Source: Reuters

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Manuel

Economic

Stocks

US stocks closed out a winning week mixed on Friday as Wall Street took stock of the US economy from a lofty, record-setting perch ahead of the Federal Reserve's highly anticipated decision on interest rates next week.

The tech-heavy Nasdaq Composite (^IXIC) climbed around 0.5% to notch its fifth-consecutive record as Tesla (TSLA) stock hit a seven-month high. The S&P 500 (^GSPC) fell just below the flat line, while the Dow Jones Industrial Average (^DJI) fell 0.6%.

Still, the Dow gained nearly 1% for the five trading sessions through Friday, its first win in three weeks, and the S&P 500 and Nasdaq had their best showings since early August.

Investors have taken in several weeks' worth of economic data to gain clues on the Fed's next move. Over the last week, jobs data has shown clear signals of labor market weakness, with just over 20,000 jobs added last month and weekly initial jobless claims surging to a near four-year high.

Meanwhile, inflation remains stubborn, with consumer prices rising last month amid more signs that President Trump's tariffs are filtering their way into the economy.

The University of Michigan's consumer sentiment survey released Friday showed consumer sentiment slipped more than expected in September, while long-run inflation expectations jumped to 3.9%, as Americans worried over the effects of tariffs.

But investors are betting inflation is tame enough for the Fed to cut next week — and then some.

Traders are pricing in a more than 90% chance of a quarter-point cut when the Fed holds its September meeting, according to CME Group. Beyond that, around 75% are betting the central bank will cut the equivalent of three times before the end of the year.