Impact of Iran War on Southeast Asia's Tourism Sector
Soaring prices due to Iran war hit tourism dependent countries in Asia

Image: Business Standard
The ongoing war with Iran is severely affecting tourism-dependent economies in Southeast Asia, particularly Thailand and Vietnam, as rising jet fuel prices and flight cancellations threaten the peak summer travel season. This situation follows the already fragile recovery from the COVID-19 pandemic, leading to significant economic concerns for these nations.
- 01Tourism contributes nearly 13% to Thailand's GDP and 9% to Vietnam's GDP, making it a vital economic sector.
- 02Flight cancellations and increased airfares, such as Cathay Pacific's fuel surcharge rising from HKD 264 to HKD 633, reflect the strain on travel options.
- 03Cambodian tuk-tuk driver Siv Pech reports daily earnings have plummeted from $20 to about $5 due to reduced tourist activity.
- 04Moody's Analytics predicts the war's impact could lower economic growth in the Asia-Pacific region by 0.1 to 0.4 percentage points by 2026.
- 05Visitor numbers to Thailand fell 7% year-on-year in April, with significant declines in arrivals from Europe and the Middle East.
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The war with Iran is causing significant disruptions in the tourism sector of Southeast Asia, particularly affecting countries like Thailand and Vietnam. With the summer travel season approaching, soaring jet fuel prices and uncertainties surrounding ceasefire agreements are leading to flight cancellations and increased ticket prices. The region's tourism industry is still recovering from the impacts of the COVID-19 pandemic, making the current situation even more precarious. For instance, tourism accounts for nearly 13% of Thailand's GDP and 9% of Vietnam's, highlighting its economic importance. Reports indicate that airlines are adjusting schedules and raising fuel surcharges, with Cathay Pacific's fees increasing significantly. Local tourism operators, such as tuk-tuk drivers in Cambodia, are struggling with drastically reduced earnings, with some reporting daily incomes dropping from $20 to just $5. The situation is compounded by rising costs of goods and services, which threaten the viability of businesses reliant on tourism. Analysts predict that the ongoing conflict could reduce economic growth across the Asia-Pacific region by 0.1 to 0.4 percentage points by 2026, further stressing the tourism-dependent economies.
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The war's repercussions are causing significant economic strain on tourism-dependent countries in Southeast Asia, leading to reduced visitor numbers and increased operational costs for local businesses.
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