Cambodia’s economy is forecasted to grow by 6.1% in 2025 and 6.2% in 2026, supported by strong external demand for manufactured goods and a gradual rebound in tourism. However, escalating global trade tensions and newly announced tariffs by the U.S. could cast shadows on the otherwise positive outlook.
Resilience Amid Global Uncertainties
The Asian Development Outlook (ADO) April 2025, released by the Asian Development Bank (ADB), indicates that Cambodia’s GDP grew by 6.0% in 2024 and will maintain steady momentum over the next two years. The baseline forecasts, however, do not yet factor in the potential economic implications of the April 2, 2025 U.S. tariff announcement.
“The positive economic outlook for Cambodia in 2025 and 2026 reflects the country’s potential for resilience and underlying strengths,” said Jyotsana Varma, ADB Country Director for Cambodia.
During a press briefing, Varma highlighted that regional demand, especially in electronics and exports, drove growth across Asia last year. Cambodia is now leveraging similar trends through robust performance in both garment and non-garment manufacturing.
Key Growth Drivers
Industrial output is projected to surge by 9.3% in both 2025 and 2026. The services sector is also expected to continue expanding at 4.4%, though real estate activity remains subdued. Tourism continues its moderate recovery, with over 1.26 million international visitors arriving by February 2025. Still, the quality of tourism in terms of spending behavior has yet to reach pre-pandemic levels.
ADB Economist Milan Thomas provided additional context, highlighting:
- Rising external demand for Cambodian exports
- Ongoing supply chain shifts from global manufacturers
- Trade risk scenarios involving U.S. tariffs and China’s property sector
ADB’s Poullang Doung, Principal Economics Officer, pointed out that Cambodia’s economic acceleration in 2024 came despite a fiscal deficit of nearly $900 million, attributed to declines in both revenue and government expenditure compared to 2023.
Trade Agreements & Digital Priorities
ADB officials praised the Cambodian government for expanding its trade framework through:
- RCEP implementation
- Multiple Free Trade Agreements (FTAs)
- Strengthened cooperation with ASEAN countries
Varma noted that continued diversification of Cambodia’s export basket—especially toward high-volume goods—will be critical in maintaining resilience.
In parallel, the ADB emphasized digital transformation as a cornerstone of Cambodia’s long-term development strategy. The country has shown progress, moving up the UN e-Government Development Index from 155th in 2012 to 120th in 2024, yet considerable gaps persist. To support inclusive and sustainable growth, Cambodia must accelerate investments in digital public infrastructure, including national digital ID systems, broadband access, data centers, and cybersecurity. Building digital innovation hubs and investing in human capital development will also be essential to diversify the economy and boost long-term productivity. As ADB Country Director Jyotsana Varma noted, these strategic investments are key to unlocking new growth drivers and enhancing Cambodia’s resilience amid global uncertainty.
Source: ADB
