PHNOM PENH: The Asian Development Bank (ADB) on Tuesday (Sept 30) revised its growth forecast for Cambodia from 6.1 per cent to 4.9 per cent for 2025 due to border tensions with Thailand and US tariff hike.
The lender also reduced the kingdom's growth for 2026 to 5 per cent from an earlier projection of 6.2 per cent.
"The economy performed well in the first half (H1) of 2025, but H2 is expected to weaken due to border tensions with Thailand and the lingering effects of United States trade policy uncertainty," the ADB said in a news release.
On Aug 1, the US imposed a 19 per cent tariff on all goods imported from Cambodia.
ADB Country Director for Cambodia Jyotsana Varma said lower-than-expected food price increases and declining fuel costs helped ease inflation, while industrial activity remained robust.
"Looking ahead, there is scope for continued recovery in the construction and tourism sectors, alongside steady growth in agriculture, which together point to a more balanced and sustainable expansion," she said.
According to the news release, year-on-year inflation declined sharply from 6 per cent in January to 1.6 per cent in June, and the inflation is expected to average around 2 per cent in 2025 and 2026.
Industry continues to be the main growth engine.
Garment exports surged 22.2 per cent year-on-year in the first half of 2025, partly due to US buyers stocking up in anticipation of higher tariffs on Cambodian imports, the news release said.
Growth in the services sector is projected to moderate to 2.8 per cent in 2025 and 2.6 per cent in 2026, the press release said, adding that tourism showed continued recovery in the first half of 2025 with increased arrivals from China.
"However, ongoing border tensions with Thailand are expected to dampen tourism and weigh on broader service activities in the second half of the year and beyond," the press release said.
The agriculture sector is forecast to expand by 1.1 per cent in 2025 and 2026, supported by sustained export demand and the anticipated return of agricultural laborers from Thailand in the latter half of the year, the news release said. - Xinhua
