AKP Phnom Penh, April 10, 2026 --

Cambodia’s economy is forecast to grow by 4.5 percent in 2026 under a scenario of early stabilisation in the Middle East, according to the latest report from the Asian Development Bank (ADB).

The projection, outlined in the Asian Development Outlook (ADO) April 2026, assumes that disruptions to global commodity markets do not persist. Growth is expected to strengthen further to 5.0 percent in 2027 as external conditions improve and domestic reforms begin to bear fruit.

“Cambodia continues to show resilience in the face of external pressures,” said Mrs. Yasmin Siddiqi, noting that manufacturing remains a key pillar of growth, while government efforts to revive tourism are expected to support broader economic momentum.

Industrial output is projected to expand by 7.3 percent in 2026, driven by strong garment exports and rising contributions from non-garment sectors such as electrical components, tyres and furniture.

Agriculture is expected to record modest growth of 0.9 percent, supported by demand for rice and cashew exports, alongside policies aimed at sustainable production and workforce reintegration.

However, the services sector is likely to soften, with growth slowing to 2.3 percent from 3.4 percent in 2025, partly due to the economic impact of the Thailand border closure. 

Despite this, investor confidence remains robust, with approved fixed asset investment rising by 45 percent in 2025, reflecting continued diversification into higher-value industries.

Inflation is forecast to edge up to 2.8 percent in 2026, although risks remain tilted to the upside. A prolonged spike in global fuel prices could increase input costs across key sectors, including agriculture, manufacturing and tourism. 

At the same time, the fiscal deficit is expected to widen as public spending rises to support vulnerable households, while revenue growth moderates.

Commenting on the outlook, Mr. Thong Mengdavid, Geopolitical and Security Analyst, said Cambodia’s growth moderation reflects weakening external demand, particularly in garments, alongside structural challenges in construction and tourism.

He warned that rising competition from low-cost economies such as Bangladesh and Sri Lanka is eroding Cambodia’s traditional advantages, while global supply chain disruptions linked to the Middle East crisis continue to weigh on productivity.

“External shocks remain a key driver of inflationary pressure,” he said, noting Cambodia’s heavy reliance on imported fuel. Higher logistics and production costs are likely to be passed on to consumers, placing pressure on household purchasing power and small businesses.

While Cambodia has made progress in diversifying into electronics, agro-processing and digital sectors, Mr. Mengdavid stressed that the transition remains at an early stage. 

Addressing skills gaps, improving infrastructure and accelerating industrial upgrading will be critical if the country is to achieve its ambition of becoming a high-income economy by 2050.

By Sum Kosal