PHNOM PENH: Cambodia's economy is proving resilient, supported by surging foreign direct investment (FDI) and buoyant exports, although rising fuel costs are pressuring businesses and households, said the World Bank's latest economic update released on Tuesday (June 9).
The report said the conflict in the Middle East has transmitted an oil price shock to the South-East Asian country, leading to higher transport and production costs for firms and limiting their ability to sustain employment.
This comes as the economy navigates a property sector downturn and a contraction in remittances following the return of nearly one million migrant workers, it said, adding that headline inflation surged to 5.8 per cent in April 2026, disproportionately affecting low-income households.
A 10 per cent increase in fuel prices is estimated to raise the poverty rate by 1.4 percentage points, the report said.
"Against these challenges, foreign direct investment reached US$5.1 billion in 2025, helping to create an estimated 400,000 formal jobs while offering critical employment opportunities for workers moving from agriculture and returning migrants," the report said. "Goods exports also remain strong, growing by 17.7 per cent in the first quarter of 2026."
According to the report, real GDP growth is projected to moderate to 3.9 per cent in 2026 before recovering to 4.9 per cent in 2027.
"Cambodia's economy is holding in the face of simultaneous shocks, demonstrating a resilience that can be sustained through targeted policy action to protect jobs and livelihoods," Tania Meyer, World Bank country manager for Cambodia, said at the launching event of the report in Phnom Penh.
With the working-age population share projected to peak around 2043, the next 15 to 20 years are decisive for Cambodia's future. Investing in people in education, in jobs, in new engines of growth is what will turn Cambodia's demographic window into its greatest competitive advantage, she added.
The report recommends a multi-pronged policy response focused on protecting livelihoods and supporting job creation while pursuing structural reforms that strengthen competitiveness and productivity.
In the short term, it suggests targeted, time-bound cash transfers to vulnerable households rather than broad fuel-tax relief. - Xinhua
