Cambodia Investment Review
Cambodia’s economy is expected to regain momentum in 2027, supported by manufacturing exports, foreign investment and economic diversification, according to the Asian Development Bank.
The Asian Development Bank (ADB) has lowered its economic growth forecast for Cambodia to 3.9% in 2026, down from the 4.1% projected in July, as weaker tourism activity weighs on the country’s services sector.
Growth is forecast to accelerate to 4.7% in 2027, supported by resilient manufacturing, export diversification and continued foreign direct investment, according to the Asian Development Outlook September 2026 released on Wednesday.
“Cambodia’s economy continues to demonstrate resilience,” said ADB Country Director for Cambodia Yasmin Siddiqi.
She said strong manufacturing exports and investment inflows were helping to offset challenges facing tourism, while further economic diversification, competitiveness reforms and support for vulnerable households would be important for sustaining inclusive growth.
Manufacturing Remains Cambodia’s Main Growth Engine
Industry continues to drive Cambodia’s economic expansion, with non-garment manufactured exports rising 38.4% year on year during the first half of 2026.
The increase reflected Cambodia’s growing diversification into higher-value products, including electrical components, vehicle parts, tires and wooden goods.
Garment exports, which remain a major source of employment and foreign exchange, increased 6.3% to $8 billion over the same period.
However, construction and real estate activity remained subdued, limiting the broader contribution of the industrial sector.
ADB said continued investment inflows should support production capacity and Cambodia’s integration into regional and global supply chains.
Visitor Arrivals Fall Nearly 48%
The downward revision primarily reflects a sharp slowdown in tourism and related services.
International visitor arrivals fell 47.9% year on year to 1.8 million during the first six months of 2026. That represented just over half of Cambodia’s pre-pandemic visitor levels.
ADB attributed the decline partly to continuing geopolitical tensions and the closure of the Cambodia–Thailand land border.
Lower visitor numbers affected several connected industries, including hospitality, transport, retail and cross-border trade, weakening the overall outlook for the services sector.
Tourism has traditionally been one of Cambodia’s most important sources of employment and foreign currency earnings. A prolonged downturn could therefore place additional pressure on businesses and workers dependent on international travel.
Inflation Forecast Raised to 4.7%
ADB also raised its inflation forecast for Cambodia, citing higher global oil prices and increasing import costs.
Annual inflation climbed from 2.6% in February to 7.2% in May before moderating to 5.5% in July.
The development bank now expects inflation to average 4.7% in 2026 before easing to 2.8% in 2027.
Fuel tax relief measures and a broadly stable Cambodian riel are expected to help contain price pressures. However, elevated energy and import costs could continue affecting households and businesses in the near term.
Cambodia relies heavily on imported fuel and other essential goods, leaving the economy exposed to fluctuations in global commodity prices and international transportation costs.
Government Spending to Support Activity
Fiscal policy is expected to remain supportive, with government investment in infrastructure, human capital and social protection helping sustain domestic economic activity.
ADB highlighted Cambodia’s Comprehensive Intervention Program as an important mechanism for directing support toward the economy and vulnerable households.
The country’s current account deficit is expected to widen in 2026 due to higher import costs and weaker tourism revenue. Nevertheless, continued foreign direct investment should help support Cambodia’s international reserves.
Agriculture is expected to make a modest contribution to growth, supported by external demand for cashews, cassava and milled rice.
Outlook Faces Downside Risks
ADB said risks to Cambodia’s economic outlook remain tilted to the downside.
In addition to continued tourism weakness and geopolitical uncertainty, potential El Niño-related weather disruptions in late 2026 and early 2027 could affect agricultural production and rural livelihoods.
The latest forecast suggests Cambodia is entering a period of slower but increasingly diversified growth, with manufacturing and investment taking on a larger role as tourism, construction and real estate struggle to regain momentum.
