Cambodia Eyes 6.1% Growth in 2025, But Risks Cloud Outlook

[geovalin]

 

Cambodia’s economy is set to expand by 6.1% in 2025, driven by resurgent exports and a tourism revival, according to the Asian Development Bank’s (ADB) latest forecast. The upbeat projection comes after a stronger-than-expected 6.0% growth in 2024, but the recovery remains uneven—shadowed by risks in the real estate sector, rising inflation, and structural bottlenecks.

 

The Asian Development Outlook April 2025 notes that industrial output remains Cambodia’s key growth engine, fuelled by a 23.5% surge in garment exports and renewed foreign investment in non-garment manufacturing. Tourist arrivals rebounded to pre-pandemic levels last year, particularly from neighbouring countries, bolstering services.

 

Yet the recovery hasn’t reached all corners of the economy. Construction remains sluggish, weighed down by weak demand and a subdued property market. Inflation, which averaged just 0.8% in 2024, is forecast to rise sharply to 3.7% in 2025, driven by higher food demand and a low-base effect.

 

Agriculture grew just 0.9% last year due to El Niño-related droughts, though exports of cassava, rubber, and cashew nuts offered some support. Looking ahead, modest gains are expected, with growth projected at 1.0% in 2025, aided by new trade deals with China and South Korea.

 

Fiscal pressures are also building. The government’s budget deficit widened to $0.9 billion in 2024, and is set to grow to $1.5 billion in 2025, as it boosts spending to support recovery. Public debt remains manageable at 26.3% of GDP.

 

The ADB highlights the need for deeper reform, especially in digital infrastructure, to sustain long-term growth. While Cambodia has made strides in rolling out digital ID systems and broadband access, it still ranks low on global e-governance benchmarks. Analysts warn that without significant investment in skills and regulatory frameworks, productivity gains will stall.

 

The overall outlook remains positive—but fragile. With the global trade environment uncertain, a weak property market, and inflation creeping up, much will depend on the government’s ability to navigate risks and drive reform.

 

Cambodia may be bouncing back—but sustaining the momentum will take more than just export numbers.

 

 

-2025-04-10