Key View
- We have revised our forecast for Cambodia’s real GDP growth and now expect the economy to pick up from an estimated 5.7% in 2024 to 5.9% in 2025, down from 6.1% previously.
- We expect that momentum in garment, travel goods and footwear (GTF) exports will in part be weighed down by the ongoing downturn in the construction sector.
- Risks are skewed to the downside. Not only will a slowdown in US economic activity weigh on Cambodia’s growth but Cambodia remains susceptible to the potential imposition of reciprocal tariffs by US President Donald Trump.
Whereas we previously expected the Cambodian economy to expand by 6.1% in 2025, we now forecast real GDP growth of 5.9%, up from an estimated 5.7% in 2024 – some way below the government’s forecast of 6.3%. While our forecast suggests that the economy will expand by less than its recent past where growth averaged 7.1% between 2015 and 2019 (see chart below, left), it will nonetheless outperform our 2025 growth forecast of 3.9% for emerging markets (EMs), excluding Mainland China (see chart below, right).
Cambodia’s economic landscape is poised for recovery, with growth expected to accelerate as the nation rebounds from the pandemic-induced slowdown. Key sectors, such as textiles, construction, and agriculture, are gaining momentum, supported by increased exports and foreign investments. The government’s strategic focus on infrastructure development and trade expansion has bolstered confidence, stimulating domestic and international interest in Cambodia as a business hub. Tourism, a vital pillar of the economy pre-pandemic, is also showing signs of rejuvenation as global travel gradually resumes.
However, despite the positive outlook, Cambodia faces persistent headwinds that could temper growth. The nation remains vulnerable to global economic uncertainties, including fluctuating commodity prices and geopolitical tensions that can affect trade. Additionally, domestic challenges such as limited infrastructure in rural areas and a need for further diversification of industries highlight underlying vulnerabilities. Addressing these issues is crucial for sustaining long-term growth and ensuring that economic benefits are widely distributed among the population.
To navigate these challenges, Cambodia must continue to implement reforms that enhance economic resilience. Strengthening human capital through education and vocational training can equip the workforce with the skills needed for evolving industries. Furthermore, advancing governance and regulatory frameworks will create a more conducive environment for business operations. By pursuing these strategic initiatives, Cambodia can better harness its growth potential, ultimately fostering a more inclusive and sustainable economic trajectory.
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