The Asian Development Bank (ADB) has revised Cambodia’s growth forecast to 4.9% for 2025 and 5.0% for 2026, down from previous projections of 6.1% and 6.2%, respectively. The revision reflects economic challenges stemming from geopolitical tensions with Thailand and uncertainty in the United States export market. Despite these challenges, Cambodia is expected to maintain solid growth through 2026, driven by a strong industrial sector and steady inflows of foreign direct investment.
ADB Country Director for Cambodia, Jyotsana Varma, noted that the economy demonstrated resilience in the first half of 2025. Lower-than-expected food price increases and declining fuel costs helped ease inflation, while industrial activity remained robust. Continued recovery is anticipated in the construction and tourism sectors, alongside steady growth in agriculture, contributing to a more balanced and sustainable expansion.
According to ADB’s Asian Development Outlook (ADO) September 2025, year-on-year inflation fell sharply from 6.0% in January to 1.6% in June and is expected to average around 2.0% in 2025 and 2026.
The industrial sector remains the main growth engine, with garment exports rising 22.2% year-on-year in the first half of 2025, partly due to US buyers stocking up ahead of higher tariffs on Cambodian imports. Despite cautious sentiment among importers due to trade policy uncertainty, the garment and non-garment manufacturing sectors are expected to remain strong, supported by a relatively favorable 19% US tariff rate.
Growth in the services sector is projected to moderate to 2.8% in 2025 and 2.6% in 2026. Tourism showed continued recovery in early 2025, fueled by increased arrivals from China. However, ongoing border tensions with Thailand are expected to dampen tourism and weigh on broader service sector activities in the latter half of the year.
The agriculture sector is forecast to expand by 1.1% in 2025 and 2026, supported by sustained export demand and the anticipated return of agricultural laborers from Thailand later in the year. Agricultural exports rose 14.1% year-on-year in the first half of 2025, driven by strong shipments of cashew nuts and milled rice, offsetting declines in cassava and rubber exports.
ADB, established in 1966 and owned by 69 members, supports inclusive, resilient, and sustainable growth across Asia and the Pacific. The bank works with its members and partners to address complex challenges through innovative financial tools and strategic partnerships, aiming to improve infrastructure, enhance lives, and safeguard the environment.
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