According to an ADB’s press release on Sept. 30, solid growth is expected through 2026, driven by continued strength in the industrial sector and steady inflows of foreign direct investment.

“The economy has shown resilience in the first half of 2025,” said ADB Country Director for Cambodia Ms. 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 percent in January to 1.6 percent in June. Inflation is expected to average around 2.0 percent in 2025 and 2026.

Industry continues to be the main growth engine. Garment exports surged 22.2 percent year-on-year in the first half of 2025, partly due to U.S. 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 percent U.S. tariff rate.

Growth in the services sector is projected to moderate to 2.8 percent in 2025 and 2.6 percent 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 percent 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 percent 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.

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In forecasts for Cambodia in its World Economic Outlook released last week, the IMF projected a relatively rare current account surplus of 2.3 percent of GDP for this year, reversing a deficit of 1.7 percent last year.

Cambodia’s surplus is, however, forecast to fall to 1.1 percent of GDP next year. That compares with deficits of between 2.5 and almost 30 percent since 2017.

The current account balance measures trade in goods and services along with other financial transfers such as worker remittances and foreign aid. A surplus can reflect a high rate of national savings compared to investment.

In the IMF data released last week, Singapore — considered an advanced economy — is forecast to have the biggest surplus (17.2 percent of GDP).

Among the other ASEAN economies, Brunei ranks next (15.4 percent) followed by Vietnam (3.2 percent), Cambodia (2.3 percent), Malaysia (1.6 percent) and Thailand (1.2 percent).

The Philippines is forecast to suffer the biggest deficit among ASEAN economies (3.4 percent) followed by Myanmar (2.4 percent), Indonesia (1.5 percent) and Laos (0.1 percent).

Among the other five members of the Regional Comprehensive Economic Partnership, South Korea is forecast to record the biggest current account surplus (3.5 percent of GDP) followed by Japan (3.4 percent) and China (1.9 percent).

New Zealand is projected to suffer the biggest deficit (4.9 percent) followed by Australia (3.1 percent).

On a global basis, the IMF’s outlook said current account balances — the sums of absolute surpluses and deficits — were expected to shrink over the coming five years.

“The widening of current account balances in 2024 reflected widening domestic imbalances and a pickup in global goods trade,” it said.

“Over the medium term, global balances are expected to narrow gradually as the effects of these factors wane.”

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Released in Washington on Thursday last week, the annual report puts Cambodia among the fastest growing emerging markets and developing economies in East Asia — ahead of China, Indonesia, Malaysia, Laos, Thailand and Myanmar.

But the forecasts for Cambodia trail those for Mongolia (6.5 percent this year and 6.1 percent next year), Vietnam (6.6 percent and 6.1 percent) and the Philippines (6.1 percent and 6.0 percent).

China is forecast to grow 4.5 percent this year and 4.0 percent next year.

Elsewhere in East Asia, growth forecasts are for 5.1 percent in Indonesia both this year and next year, 4.5 percent and 4.3 percent in Malaysia, 3.7 percent in both years in Laos, and 2.9 percent and 2.7 percent in Thailand.

Myanmar is meanwhile expected to grow only 2.0 percent this year, with no forecast available for next year.

REGIONAL GROWTH UNDERPINNED BY SOLID DOMESTIC DEMAND

In East Asia and the Pacific (EAP) excluding China, “solid domestic demand is expected to underpin growth over the forecast horizon,” the World Bank says.

“Private consumption is set to remain firm, supported by low inflation and robust labour market conditions that will bolster household incomes.”

But the outlook for public investment across the region is mixed.

“In all, investment growth is expected to pick up somewhat but fall short of pre-pandemic averages,” the bank says.

‘PARTICULARLY SIGNIFICANT THREAT’ FROM GLOBAL TRADE UNCERTAINTY

“Risks to the regional outlook remain tilted to the downside and centered on adverse global policy shifts and weaker-than-expected growth in China—with spillovers to other countries in the region.

“Heightened uncertainty about global trade policies poses a particularly significant threat given the importance of export-oriented activity linked to global value chains in many EAP economies.

“Rising conflict and more frequent climate change–related natural disasters present further downside risks.

Prospects for U.S. growth, global inflation, and monetary policy remain uncertain and subject to both upside and downside risks.”

SEIZING UNTAPPED OPPORTUNITIES FOR CROSS-BORDER COOPERATION

Given global policy uncertainty and trade tensions, World Bank Deputy Chief Economist M. Ayhan Kose says “developing economies will need bold and far-reaching policies to seize untapped opportunities for cross-border cooperation.

“A good start would be to pursue strategic trade and investment partnerships with the rapidly expanding markets of other developing nations,” Kose says.

“Modernising transportation infrastructure and standardising customs processes are critical steps to cut unnecessary expenses and foster greater trade efficiency.

“Finally, sound macroeconomic policies at home will fortify their capacity to navigate the uncertainties of the global outlook.” AKP

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The projection was mentioned in the draft National Budget Law 2024 released late last week by the Ministry of Economy and Finance.

The projected 2024 economic growth is higher than that of 2023 which is estimated to be 5.6 percent, it pointed out. Gross domestic product per capita is expected to increase to $2,071 in 2024, up from an estimated $1,917 in 2023, the source underlined.

The industry sector is expected to increase by 8.5 percent in 2024, up from 5 percent in 2023 thanks to the expected recovery of the garment sub-sector and the strong growth of the non-garment manufacturing sub-sector, while the growth in the construction sector would remain low.

The service sector is forecast to continue to grow, at 6.9 percent next year even though less than in 2023 (around 8.1 percent) with the recovery of local economic activities, and the agriculture sector is expected to achieve a 1.1 percent growth in 2024, up from 0.9 percent this year thanks to crop, fisheries and animal husbandry sub-sectors.

The draft document, however, stated that Cambodia will continue to face major risks and challenges, especially from external factors that could make the growth unable to achieve as projected and slow down Cambodia’s overall economic growth over the medium period.

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Thanks to garment exports, tourism, construction, and agriculture, the kingdom’s economy is predicted to grow 6.6 percent next year, up from around 5.6 percent this year, the report said.

The Southeast Asian country has been classified as a lower middle-income economy since 2015.

Speaking at a get-together with thousands of garment factory workers in Phnom Penh on Saturday, Prime Minister Hun Manet said the country “targets an upper middle-income status by 2030 and a high-income status by 2050.”

Upper middle-income economies are defined by a GDP per capita between 4,466 dollars and 13,845 dollars, while high-income economies have a GDP per capita of 13,846 dollars or more, according to the World Bank’s classifications.

Meanwhile, Hun Manet said the country’s poverty rate had remarkably dropped from 33.8 percent to 17.8 percent over the 10-year period between 2009 and 2019, with almost 2 million Cambodians escaping poverty.

Cambodia has a population of approximately 17 million. People living below the poverty line are defined by an income of less than 10,951 riels or 2.7 dollars per day, according to the World Bank.

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The approval was made in the weekly plenary cabinet meeting held at the Peace Palace in Phnom Penh this morning under the chairmanship of Prime Minister Samdech Moha Borvor Thipadei Hun Manet.

According to the draft budget law released, the planned expenditure in 2024 for the national level will account for a total of KHR 34,497 billion (US$ 8.35 billion) or 24.13 percent of the country’s gross domestic product (GDP) down 5.8 percent if compared to 2023 budget law, while for the sub-national level will be some KHR 4,332 billion (US$ 1.04 billion) or 3.03 percent of GDP, up 6.6 percent compared to 2023.

This budget is an effective tool for the Royal Government to respond to domestic and international risks which is designed to take steps to implement the policy to strengthen budget efficiency by focusing on people, institutional capacity, public administration, and governance-based structural reform, and can be dubbed strategic budget for maintaining hard-earned achievements and continuing to hit new foundations to achieve the main goals of the Pentagonal Strategy-First Phase of the Royal Government of the 7th legislature of the National Assembly.

This year, the budget law 2023 approved by the parliament is 39,206,205 million Riel, approximately US$9.6 billion, which represents 29.87 percent of GDP.

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The GMS Tourism Coordinating Office is organizing a private sector roundtable on regional tourism projects to generate a public-private dialogue in which both parties can work together to meet interests and maximize value creation.

The panel discussion will be attended by delegates from Thailand, Cambodia, Laos, and Vietnam, and will be led by the Asian Development Bank (ADB).

As planned, Mr. Chuob Ratana, Director of Tourism Development Planning, Ministry of Tourism led the delegation and will present on the infrastructure investments to support regional tourism, PPP opportunities in tourism, and other private sector opportunities from regional tourism.

The GMS Strategic Framework 2030 (GMS-2030) encourages private sector participation through one of its six innovative approaches: “embracing private sector solutions”.

This aims to reverse the current limited participation of the private sector in GMS projects, which in 2021 only represented 15% of total financing in the GMS Regional Investment Framework.

The tourism sector represents a sizeable portion of the GDP of GMS countries, contributing from 4.6% to 26.4% in 2019, before the pandemic. A coordinated approach is needed, developed jointly with the private sector, to engage investors in helping to finance connectivity infrastructure and operate services more efficiently. Public-private partnerships are at the core of sustainable tourism.

Senior officials from GMS ministries of tourism; private sector participants from the GMS Business Council and tourism industry associations such as the Pacific Asia Travel Association (PATA) and Destination Mekong; the Mekong Tourism Coordinating Office; and ADB officials from the GMS Program, the Private Sector Operations Department (PSOD), and the Office of Market Development and Public-Private Partnership (OMDP) will attend the roundtable.

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Aaditya Mattoo, chief economist of the World Bank’s East Asia and Pacific Region, said the RCEP agreement and Cambodia’s new law on investment have created greater market access and helped generate new trade and investment flows for the kingdom.

It will help Cambodia diversify its economy and exports which have been heavily reliant on garments so far, he said during a video press conference on the launch of the World Bank’s East Asia and Pacific economic update report.

Mattoo suggested Cambodia improve its skilled labor and connectivity in order to sustain its economy and exports in the long run.

In the update report, the World Bank said the RCEP and other newly ratified free trade agreements (FTAs) have helped Cambodia strengthen its exports and attract more foreign direct investment (FDI).

The RCEP free trade deal comprises 15 Asia-Pacific countries, including 10 ASEAN (Association of Southeast Asian Nations) member states – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam – together with their five trading partners, namely China, Japan, South Korea, Australia and New Zealand.

Cambodia’s total exports to the RCEP member countries amounted to 4.59 billion U.S. dollars from January to July 2023, a year-on-year increase of 21 percent, according to the country’s Ministry of Commerce’s report.

Cambodian Ministry of Commerce’s Secretary of State Penn Sovicheat said the RCEP has been a key driving force for the kingdom’s export growth and has become a magnet to attract more FDI inflows to the country.

“This world’s largest FTA, along with other bilateral FTAs, will help Cambodia graduate from its least developed country status by 2027 and achieve its goals of becoming an upper-middle income country by 2030 and a high-income nation by 2050,” he told Xinhua.

According to World Bank data, the RCEP covers 2.3 billion people, 25.8 trillion U.S. dollars of global GDP, 12.7 trillion dollars of global trade in goods and services, and 31 percent of global FDI inflows.

Kin Phea, director-general of the International Relations Institute of Cambodia, a think-tank under the Royal Academy of Cambodia, said the RCEP has helped stabilize its members’ economies, especially during the period of global economic slowdown and uncertainty.

“The RCEP has great potential to create tangible benefits for all of its members, and ASEAN will reap long-term benefits from this trade pact by integrating further into global supply chains,” he told Xinhua. “I believe that the RCEP will help transform the ASEAN region into a new engine of growth in Asia.” Xinhua

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In the January-September period, Angkor entrance passes were sold to 539,561 foreign tourists, a 302 percent increase year-on-year, the Angkor Enterprise’s report pointed out.

In September alone, it added, the park attracted 41,048 foreign visitors, making US$1.86 million in revenue from ticket sales.

The entrance fee for a one-day visit to the park is $37, a three-day visit costs $62, and a week-long visit is $72.

Located in northwest Siem Reap province and listed as a World Heritage by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) in 1992, the Angkor Archaeological Park is the most popular tourist destination in the Kingdom.

Covering an area of 401sqkm, the Angkor contains the magnificent remains of the different capitals of the Khmer Empire from the ninth to the 15th centuries, and it consists of scores of key temples such as the Angkor Wat, Angkor Thom, Bayon, Chau Say Tevoda and Ta Keo, among others.

Tourism is one of the four major pillars supporting Cambodia’s economy.

In pre-pandemic 2019, the country received 6.6 million international tourists, generating $4.92 billion in revenue that accounted for 12.1 percent of the country’s Gross Domestic Product.

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Hun Manet made the remarks at the 78th Session of the United Nations General Assembly (UNGA) in New York, the United States on Friday (New York time), according to a statement of his speech released to the media on Saturday.

“Like many developing countries, Cambodia has a lot more to do to reach our goal of becoming an upper-middle-income country by 2030 and a resilient, vibrant and prosperous high-income country by 2050,” he said.

“To this end…my government is committed to taking transformative actions through our recently launched Pentagonal Strategy for Cambodia’s socio-economic development over the next 25 years,” he added.

The Pentagonal Strategy is being implemented from Phase I in the five areas of growth, employment, equity, efficiency, and sustainability, Hun Manet said, adding that the five key priorities are people, roads, water, electricity, and technology, primarily digital technology.

According to the Cambodian leader, the country is steadily transitioning from a least developed country status to a developing country status in 2027.

He said the kingdom’s economic growth is expected to grow 5.6 percent in 2023, up from 5.2 percent in 2022.

Cambodian Ministry of Commerce’s Secretary of State and Spokesman Penn Sovicheat said the Regional Comprehensive Economic Partnership (RCEP) agreement, the Cambodia-China Free Trade Agreement, and the Cambodia-Republic of Korea Free Trade Agreement will help Cambodia graduate from its least developed country status and achieve its goals of becoming an upper-middle income country in 2030 and a high-income nation by 2050.

“The RCEP, along with other bilateral FTAs, has not only given a boost to the kingdom’s sustainable trade growth but also become a magnet to attract more foreign direct investments,” he told Xinhua.

The RCEP agreement comprises 15 Asia-Pacific countries, including 10 ASEAN member states – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam – and their five trading partners: China, Japan, South Korea, Australia and New Zealand. Xinhua

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