Cambodia Warns Border Tensions, Global Conflicts Threaten Growth Outlook

PHNOM PENH, May 22, 2026 (KPT) — Cambodia has warned that escalating border tensions with Thailand and global conflicts could weigh heavily on its economy, disrupting tourism, trade and household livelihoods, according to a new fiscal strategy report.

In its 2027–2029 outlook, the Ministry of Economy and Finance identified several major risks, including volatile fuel prices, slowing global demand and uncertainty in international trade policies. Officials said clashes along the Thai border have disrupted tourism flows, cross‑border trade, labour movement, remittances and agricultural transport. Rising oil prices linked to international conflicts have also driven up production and transport costs, adding pressure on inflation and consumer spending.

The ministry cautioned that changes in US trade policies could further affect exports and manufacturing. Despite these challenges, it said Cambodia has maintained macroeconomic stability and continues to pursue reforms aimed at strengthening resilience and attracting investment.

Cambodia’s economy grew 5.3 percent in 2025 but is forecast to moderate to 4.2 percent this year, hit by higher oil prices, border tensions and the government’s crackdown on online scams.

The Asian Development Bank, in its April 2026 Asian Development Outlook, projected Cambodia could still expand by 4.5 percent this year if global tensions ease. The report said industrial output would remain resilient, with manufacturing growth forecast at 7.3 percent, supported by garments, electrical components, tires and furniture. Agriculture was expected to grow modestly at 0.9 percent, while services would slow to 2.3 percent due to border disruptions. Inflation was projected at 2.8 percent, though risks remain if fuel shocks persist.

ADB stressed that Cambodia’s long‑term growth prospects hinge on productivity gains, human capital development and diversification. It said reforms in vocational training, industrial upgrading and regional cooperation will be critical to sustaining momentum and achieving the government’s ambition of high‑income status by 2050.