ADB Lowers Cambodia's Growth Forecast But Expects Continued Economic Resilience

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ADB Lowers Cambodia's Growth Forecast But Expects Continued Economic Resilience
ADB Lowers Cambodia's Growth Forecast, But Expects Continued Economic Resilience./B2B Cambodia.

The Asian Development Bank (ADB) has revised its growth forecast for Cambodia from 6.1 per cent to 4.9 per cent for 2025 and from 6.2 per cent to 5.0 per cent for 2026, reflecting economic challenges related to geopolitical tensions with Thailand and uncertainty surrounding the United States (US) export market. Nevertheless, solid growth is expected through 2026, driven by continued strength in the industrial sector and steady inflows of foreign direct investment (FDI).

“The economy has shown resilience in the first half of 2025,” said ADB Country Director for Cambodia, Jyotsana Varma. “Lower-than-expected food price increases and declining fuel costs helped ease inflation, while industrial activity remained robust. 

Looking ahead, there is scope for continued recovery in the construction and tourism sectors, alongside steady growth in agriculture, which together point to a more balanced and sustainable expansion.

According to ADB’s flagship economic report, Asian Development Outlook (ADO) September 2025, year-on-year inflation declined sharply from 6.0 per cent in January to 1.6 per cent in June. Inflation is expected to average around 2.0 per cent in 2025 and 2026.

ADB's Revised Cambodia GDP Growth Forecast./Image credit: ADB.

Industry continues to be the main growth engine. Garment exports surged 22.2 per cent year-on-year in the first half of 2025, partly due to US buyers stocking up in anticipation of higher tariffs on Cambodian imports. Despite cautious sentiment among importers stemming from trade policy uncertainty, the garment and non-garment manufacturing sectors are expected to remain strong, supported by a relatively favourable 19 per cent US tariff rate.

Growth in the services sector is projected to moderate to 2.8 per cent in 2025 and 2.6 per cent in 2026. Tourism showed continued recovery in the first half of 2025 with increased arrivals from the People’s Republic of China. However, ongoing border tensions with Thailand are expected to dampen tourism and weigh on broader service activities in the second half of the year and beyond.

The agriculture sector is forecast to expand by 1.1 per cent in 2025 and 2026, supported by sustained export demand and the anticipated return of agricultural labourers from Thailand in the latter half of the year. Agricultural exports rose by 14.1 per cent year-on-year in the first half of 2025, driven by robust shipments of cashew nuts and milled rice, which helped offset declines in cassava and rubber exports.

ADB is a leading multilateral development bank supporting inclusive, resilient, and sustainable growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—50 from the region.

This press release was supplied.