Cambodia’s economy is expected to accelerate in 2024, with growth projected at 5.8%, rising to 6.0% in 2025, according to the Asian Development Bank’s (ADB) latest economic report. The rebound is fueled by a resurgent tourism sector and robust manufacturing growth, signaling optimism despite global economic uncertainties.
Strong Performance Amid Global Challenges
“Despite global economic challenges, Cambodia’s economy performed well in 2023,” noted ADB Country Director for Cambodia, Jyotsana Varma. The Asian Development Outlook (ADO) April 2024 report highlighted a 5.0% growth rate in 2023, driven by a recovery in tourism and steady manufacturing activity outside the garments, footwear, and travel goods (GFT) sector.
Looking ahead, the GFT sector is poised for significant growth, building on momentum from late 2023. Stronger export-oriented manufacturing will underpin economic expansion in 2024 and 2025, while inflation is expected to remain low, averaging around 2.0% over the next two years, buoyed by stable global energy prices.
Fiscal and Economic Resilience
The Cambodian government plans a gradual fiscal consolidation starting in 2024 to replenish reserves diminished during the pandemic. However, risks such as potential global economic slowdowns, rising private debt, fluctuating energy prices, and climate vulnerabilities remain.
“These challenges add layers of complexity to Cambodia’s economic narrative,” said Varma. “But the country is moving forward with cautious optimism.”
Preparing for Graduation from LDC Status
Cambodia’s upcoming graduation from the United Nations’ Least-Developed Country (LDC) category in 2027 is a pivotal milestone. The transition is expected to elevate Cambodia’s international profile and attract investment, but it also comes with challenges. Reduced access to concessional financing and preferential trade treatments may pressure growth-driving sectors and employment.
The ADB report emphasizes that to navigate this transition effectively, Cambodia must:
- Strengthen global economic integration.
- Diversify markets and focus on higher value-added products.
- Invest in sustainable infrastructure and human capital.
- Enhance domestic resource mobilization.
ADB’s Commitment to Cambodia’s Growth
ADB reaffirmed its support for Cambodia’s development journey. “ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining efforts to eradicate extreme poverty,” the bank said in a statement.
Since its establishment in 1966, ADB has been a critical partner for Cambodia and the region, with its 68-member network providing strategic guidance and financial support for long-term development.
As Cambodia balances growth opportunities with challenges, its strategic approach will be key to sustaining momentum and ensuring an inclusive economic future.
