20.05.2026
Cambodia’s economy slowed in 2025 as weaker remittances, softer tourism, border disruptions and the real-estate downturn weighed on domestic demand. Growth is expected to weaken further in 2026 under the impact of higher oil prices and external uncertainty, before recovering in 2027 as manufacturing investment translates into new capacity and exports. Inflation is projected to rise in 2026, mainly due to food and fuel pressures, but should remain moderate by regional standards. Fiscal buffers improved temporarily in 2025, but the fiscal balance is expected to return to deficit in 2026–2027. Public debt remains low, while the current account is projected to stay in deficit as import demand rises alongside manufacturing investment.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 4.8 | 3.9 | 4.9 |
| Inflation (%, yoy) | 2.5 | 3.1 | 2.7 |
| Employment rate (% of working-age population, 15+) | 75.0 | 75.1 | 75.2 |
| Fiscal balance (% of GDP) | 0.6 | -1.4 | -1.8 |
| Gross public debt (% of GDP) | 26.8 | 27.8 | 28.6 |
| Current account balance (% of GDP) | -3.1 | -4.7 | -4.5 |
Growth slows amid weaker remittances and tourism
Cambodia’s real GDP growth is estimated at 4.8% in 2025, down from 6.0% in 2024. Domestic demand weakened as remittances fell, returning migrant workers put pressure on household incomes, and the property-market downturn continued to affect credit conditions. Tourism receipts also came under pressure, with international arrivals declining in 2025.
Growth is projected to moderate further to 3.9% in 2026, reflecting weaker consumption, higher oil prices and softer goods exports. A recovery to 4.9% is expected in 2027 as new manufacturing investment supports capacity expansion, exports and job creation. However, the recovery remains exposed to external demand, regional tensions and financial-sector risks.
Manufacturing investment supports the medium-term outlook
Investment remains the main positive driver of the outlook. Foreign direct investment into manufacturing and tradable sectors increased in 2025, helping support employment and partially absorb returning migrant workers. Goods exports also remained resilient, especially garment, travel goods and footwear, electronics and other manufacturing segments.
The main challenge is that growth is becoming less balanced. Services have weakened, tourism is not recovering as strongly as expected, and the construction and real-estate correction is still weighing on banks. Rising non-performing loans and declining collateral values create risks to credit growth and financial stability.
Inflation rises but remains moderate
Inflation averaged 2.5% in 2025 and is projected to rise to 3.1% in 2026 before easing to 2.7% in 2027. The increase in 2026 is mainly linked to higher oil prices, food costs and transport prices. Cambodia’s high dollarisation and relatively contained domestic demand should help limit broader inflationary pressure.
However, inflation risks are important for households. Higher food and fuel prices could slow poverty reduction and reduce real income gains, especially for vulnerable groups. Targeted social support may be needed if energy and food shocks persist.
Fiscal position returns to deficit
Cambodia recorded its first post-pandemic fiscal surplus in 2025, estimated at 0.6% of GDP, supported by stronger trade-related revenue, improved compliance and expenditure restraint. This helped rebuild fiscal buffers after several years of pandemic-related deficits.
The fiscal balance is projected to return to deficit, at 1.4% of GDP in 2026 and 1.8% in 2027, as spending pressures rise and revenue growth moderates. Public debt remains low, increasing from 26.8% of GDP in 2025 to 28.6% in 2027. This gives the government some fiscal space, but budget credibility, contingent liabilities and financial-sector risks require careful management.
External position remains under pressure
The current account deficit widened to 3.1% of GDP in 2025 and is projected to increase to 4.7% in 2026 before narrowing slightly to 4.5% in 2027. Strong FDI inflows have helped finance the deficit, while international reserves remain comfortable.
External risks remain significant. Cambodia is exposed to global trade policy uncertainty, weaker demand for garments and manufactured exports, lower remittances, tourism weakness and higher energy prices. Border tensions and supply-chain disruptions could further affect exports, tourism and investor confidence.
Overall outlook
Cambodia’s outlook remains positive but more fragile than in previous years. Growth is expected to slow in 2026 before recovering in 2027, supported by manufacturing investment and exports. Inflation should remain moderate, while public debt is low and fiscal space remains available. The main challenges are weak domestic demand, the real-estate downturn, rising financial-sector risks, falling remittances and exposure to external shocks. Sustained growth will depend on strengthening financial supervision, improving logistics and trade facilitation, supporting export diversification and protecting vulnerable households from food and fuel shocks.
Sources:
World Bank, Cambodia Macro Poverty Outlook, April 2026.
World Bank, Cambodia Economic Update, December 2025.
International Monetary Fund, Cambodia: 2025 Article IV Consultation and Staff Report, December 2025.
International Monetary Fund, World Economic Outlook, April 2026.
Asian Development Bank, Asian Development Outlook, April 2026: Cambodia.
AMRO, Cambodia: Proactive Policies Essential for Resilience Amid Strong Headwinds, April 2026.
