ADB cuts Cambodia growth forecast amid trade uncertainty, border tensions

PHNOM PENH, Cambodia (Sept.30, 2025) — The Asian Development Bank on Tuesday lowered its economic growth forecast for Cambodia, citing geopolitical tensions with Thailand and uncertainty in the U.S. export market.

In its September update to the Asian Development Outlook, the Manila-based lender revised Cambodia’s 2025 growth projection from 6.1% to 4.9%, and its 2026 forecast from 6.2% to 5.0%. Despite the downgrade, the ADB said the economy remains resilient and is expected to post solid gains through 2026, supported by industrial expansion and steady foreign direct investment.

“The economy has shown resilience in the first half of 2025,” said Jyotsana Varma, ADB country director for Cambodia. “Lower-than-expected food price increases and declining fuel costs helped ease inflation, while industrial activity remained robust.”

Cambodia’s inflation rate fell sharply from 6.0% in January to 1.6% in June, and is expected to average around 2.0% in both 2025 and 2026.

Garment exports surged 22.2% year-on-year in the first half of 2025, driven in part by U.S. buyers anticipating higher tariffs on Cambodian goods. The ADB said manufacturing is likely to remain strong, bolstered by a relatively favorable 19% U.S. tariff rate.

Growth in services is projected to slow to 2.8% in 2025 and 2.6% in 2026. Tourism rebounded in the first half of the year, led by increased arrivals from China, but border tensions with Thailand are expected to weigh on the sector in the months ahead.

Agriculture is forecast to grow by 1.1% annually through 2026, supported by export demand and the expected return of Cambodian laborers from Thailand. Agricultural exports rose 14.1% year-on-year in the first half of 2025, led by cashew nuts and milled rice, offsetting declines in cassava and rubber.