US Tariffs, Thai Border Closure Slow Cambodia’s Growth to 5%

Heng Chivoan, KT

Cambodia’s Ministry of Economy and Finance (MEF) has revised its 2025 growth forecast down to 5 percent, citing the dual impact of US reciprocal tariffs and the ongoing closure of the Cambodia–Thailand land border. The mid-year report, released Saturday, paints a more cautious outlook for the kingdom’s economy amid mounting external pressures.

Originally projected to grow by 6.3 percent, Cambodia’s economy has been hit by countervailing duties on key exports—garments, furniture, tyres, and electronics—destined for the US market. The tariffs have dampened momentum in both garment and non-garment manufacturing, sectors that underpin much of the country’s industrial output.

The closure of the land border with Thailand, which may remain in effect until year-end, has further disrupted production and tourism. Cross-border transport of raw materials has stalled, and international tourist flows—particularly those arriving by land—have plummeted. Hospitality and food services are among the hardest-hit, with growth in those sub-sectors expected to contract by nearly 7 percent.

Despite these setbacks, Cambodia welcomed 3.4 million international tourists in the first half of 2025, a modest 6.2 percent rise.

Domestic tourism surged by over 50 percent, buoyed by increased air travel from Thailand and beyond. The construction sector continues its slow recovery, while agriculture remains stable, growing at just under 1 percent.

The MEF warns that risks from both domestic and global factors remain high. It urges the Royal Government to stay vigilant and adapt policy responses to safeguard macroeconomic stability. A further review of the 2025 budget is scheduled for September.

While the industrial sector is still expected to grow by 7.1 percent, the broader picture reflects a slowing economy grappling with geopolitical headwinds and logistical bottlenecks. The MEF’s revised forecast underscores the need for resilience and strategic planning in the face of shifting global dynamics.

-2025-08-25