Cambodia Posts 5.9% Growth but Faces Tougher Months Ahead

[geovalin]

Sokunthea, KT

 

Cambodia’s economy expanded by a solid 5.9% in the first half of 2025, driven by exports, household consumption, and infrastructure investment—but mounting global risks are clouding the outlook for the rest of the year.

 

The figures, released Monday by the National Bank of Cambodia (NBC), reflect strong performances in manufacturing, tourism, and agriculture. The report also highlighted inflation at 3.5%, a firming riel, and healthy international reserves of $24.8 billion—enough to cover 7.5 months of imports.

 

But despite this robust start, the central bank warned of increasing headwinds: “The global economy has been affected by rising protectionism, armed conflicts, and geopolitical tensions,” the report noted, calling for vigilance as external risks build.

 

While inflation pressures are expected to ease, the NBC signalled a cautious stance for the second half of the year, maintaining flexible monetary policy to support price and exchange rate stability.

 

The banking sector remains resilient, with asset growth at 7.3% and deposits up by 14.5%. However, credit growth lags and non-performing loans edged up to 8.3%. The central bank stressed it is strengthening oversight and encouraging credit flow while continuing to modernise Cambodia’s financial system, including reforms to promote green finance and digitalisation.

 

Economists have echoed the call for reform. Darin Duch urged the government to accelerate diversification and boost green and digital growth to shield the economy from global shocks. “Cambodia must deepen reforms and play to its strengths—particularly preferential trade terms with the US,” he said.

 

Anthony Galliano, CEO of Cambodian Investment Management Group, praised the growth performance but warned that US demand may dip due to frontloaded orders in the first half. “Exports carried the economy, especially to the US. But uncertainty over tariffs and border tensions has led to caution among investors,” he said.

 

Galliano backed the government’s ambition to pivot toward high-skill manufacturing, particularly in automotive. But he warned: “Without better energy pricing and logistics, Cambodia risks remaining stuck in low-end production.”

 

As the second half begins, Cambodia’s growth story remains intact—but keeping the momentum will require bold, forward-looking action in an increasingly uncertain global landscape.

 

-2025-08-06