(Washington): The International Monetary Fund (IMF) has revised Cambodia’s economic growth forecast down to 4.8 per cent in 2025 and 4.0 per cent in 2026 due to export volatility, declining deposits, a slowdown in the tourism sector, and weakening domestic demand.

The Cambodia’s economy continued to accelerate in 2024, and growth reached 6.0 percent, 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 percent. However, a confluence of shocks—trade disruptions, border tensions, and anemic credit growth—exposed the economy’s vulnerabilities, and signs of economic slowdown are emerging in the second half of 2025, said IMF press release.

“Economic growth is projected to decelerate to 4.8 percent in 2025 and further to around 4.0 percent 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 press release added.

Additionally, 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. 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. Successful reintegration of returned workers into the domestic labor market could support a stronger recovery in domestic demand.
=FRESH NEWS