Phnom penh: The International Monetary Fund (IMF) on Wednesday projected Cambodia's economic growth to slow to 3.0 percent in 2026, amid higher energy prices, trade policy uncertainty, weak tourism, and subdued domestic demand.
According to Agence Kampuchea Presse, the IMF stated that Cambodia's economy has shown resilience amid successive shocks, but growth has weakened. Real GDP growth, which was supported by external demand, foreign direct investment, and infrastructure spending, is expected to decrease to 5.3 percent in 2025 from 6.0 percent in 2024.
The IMF press release highlighted that growth is projected to slow further to 3 percent in 2026 before recovering in 2027. The slowdown is attributed to higher energy prices, softer external demand, and reputational damage associated with scam activities, which are expected to weaken tourism and pose risks to financial stability.
Cambodia's economy is primarily driven by garment, footwear, and travel-goods exports, tourism, agriculture, and real estate and construction sectors. The country faces regional trade tensions and global uncertainty, necessitating structural reforms to strengthen its growth model and resilience, especially as it prepares for graduation from Least Developed Country status, according to Mr. Kenichiro Kashiwase, IMF Mission Chief for Cambodia, Asia and Pacific Department.
Mr. Kashiwase emphasized that structural reforms should improve the business climate, governance and rule of law, labor absorption, export diversification, energy security and efficiency, climate resilience, and data quality. He shared these insights during a press conference in Phnom Penh on July 8.
The IMF team completed the 2026 Article IV consultation in Cambodia from June 24 to July 8, engaging with senior officials of the Royal Government of Cambodia, the National Bank of Cambodia, other public agencies, and representatives of the private sector and development partners.
The IMF advised that fiscal policy should cushion near-term shocks through temporary, targeted support while preserving medium-term fiscal discipline. It recommended that broad fuel-related support be unwound as price pressures ease, and emphasized the importance of revenue mobilization to sustain priority spending and achieve Cambodia's development goals.
Additionally, the IMF recommended that financial-sector policies focus on safeguarding stability as asset-quality pressures become more visible following the end of regulatory forbearance. It warned that real estate weakness remains a key risk given banks' exposure to the sector.