PHNOM PENH: The International Monetary Fund (IMF) has downgraded Cambodia’s economic growth forecast for 2025 from its earlier projection of 6.2% to 4.8%, and for 2026 to 4%. The IMF cited negative impacts from border tensions, a decline in tourist arrivals and sluggish activity in the financial sector.
A Nov 25 IMF report noted that the kingdom’s economy continued to accelerate in 2024, and growth reached 6%, bolstered by a strong rebound in garment and agricultural exports and a continued recovery in tourism.
This trend continued into the first half of 2025, with nowcasting estimates pointing to year-on-year growth of 6.2%.
However, a confluence of shocks — trade disruptions, border tensions and anaemic credit growth — exposed the economy’s vulnerabilities, and signs of economic slowdown are emerging in the second half of 2025.
Economic growth is projected to decelerate to 4.8% in 2025 and drop further to around 4% per cent in 2026.
The downward revision from the 2024 Article IV staff report reflects remittance losses and a tourism slowdown, which are expected to weigh on domestic demand. Tariff effects will lower export earnings as manufacturers face margin pressures.
The report warned that risks are tilted to the downside, driven by financial sector vulnerabilities associated with the array of shocks. Trade policy uncertainty could further disrupt export growth.
Renewed border tensions could undermine confidence, amplifying adverse effects on domestic demand, tourism and financial sector stability, it explained, adding that elevated private debt, rising NPLs and governance vulnerabilities could further amplify risks to financial stability.
On the upside, deeper regional trade and investment integration could promote export growth. The successful reintegration of returned workers into the domestic labour market could support also a stronger recovery.
The IMF’s downgrade is in line with forecasts from several other financial institutions, including the World Bank (WB), the Asean+3 Macroeconomic Research Office (AMRO), the Asian Development Bank (ADB) and the Ministry of Economy and Finance. - The Phnom Penh Post/ANN
