Cambodia cuts 2026 growth forecast to 4.2%

Cambodia has lowered its economic growth outlook for 2026 to 4.2 percent, down from the earlier projection of 5 percent, citing the twin pressures of soaring fuel prices linked to the Middle East conflict and ongoing border tensions with Thailand.

Prime Minister Hun Manet announced the revision in the government’s medium‑term financial framework, warning that inflationary pressures are reshaping the country’s trajectory. The new forecast also sets growth at 5 percent for 2027, with an average of 5.5 percent expected in 2028 and 2029.

The Cambodian economy relies heavily on garment, footwear and travel goods exports, alongside tourism, agriculture, real estate and construction. These sectors have been particularly vulnerable to external shocks, with rising energy costs driving up production expenses and weakening consumer demand.

The downgrade follows a pattern seen in recent years. In 2024, Cambodia’s economy grew by 5.6 percent, buoyed by strong exports and a post‑pandemic tourism rebound. Growth slowed to 4.5 percent in 2025 as global commodity prices rose and regional instability weighed on investment. The latest forecast suggests that 2026 will mark a further dip, reflecting the country’s exposure to external risks.

Analysts note that while Cambodia’s fundamentals remain resilient, its dependence on imported energy and cross‑border trade leaves it highly sensitive to geopolitical shocks. The government has pledged to continue reforms aimed at diversifying the economy and strengthening productivity, but the immediate outlook remains clouded by uncertainty.

For households and businesses, the impact is already visible in higher living costs and tighter margins. With inflation expected to persist, policymakers face the challenge of balancing support for vulnerable groups with fiscal discipline.

The revised figures underline the fragility of Cambodia’s growth model and the need for long‑term strategies to reduce reliance on volatile external factors.

-2025-05-05