ADB Cuts Cambodia’s 2026 Growth Forecast to 3.9% as Tourism Weakens

ADB Cuts Cambodia’s 2026 Growth Forecast to 3.9% as Tourism Weakens

PHNOM PENH, Sept. 24, 2026 — The Asian Development Bank (ADB) has lowered its forecast for Cambodia’s economic growth in 2026 to 3.9%, down from 4.1% projected in July, citing weaker-than-expected activity in tourism and related services.

The ADB expects growth to recover to 4.7% in 2027, supported by resilient manufacturing, continued export diversification and sustained foreign direct investment (FDI).

Yasmin Siddiqi, ADB Country Director for Cambodia, said the economy continued to demonstrate resilience, with strong growth in manufactured exports and continued foreign investment helping offset challenges in tourism.

She said continued efforts to diversify the economy, strengthen competitiveness, support vulnerable households and improve climate resilience would be important for sustaining inclusive growth.

Inflation forecast raised

The ADB also raised its inflation outlook for Cambodia, reflecting higher global oil prices and increased import costs.

Inflation rose from 2.6% year-on-year in February to 7.2% in May, before easing to 5.5% in July. The bank now expects average inflation of 4.7% in 2026, before easing to 2.8% in 2027.

ADB said fuel-tax relief measures and relative stability in the Cambodian riel should help ease some price pressures.

The bank expects fiscal policy to continue supporting economic activity through infrastructure investment, human-capital development and social-protection programmes.

The current-account deficit is also expected to widen in 2026 because of higher import costs and weaker tourism receipts, although strong FDI inflows are expected to continue supporting Cambodia’s international reserves.

Manufacturing remains key growth driver

Manufacturing continues to be one of the main engines of Cambodia’s economy.

Manufactured exports excluding garments increased 38.4% year-on-year in the first half of 2026, reflecting greater diversification into higher-value products such as electrical components, automotive parts, vehicle tyres, wood products and furniture.

Garment exports also increased 6.3% to US$8 billion during the period.

However, the construction and real-estate sectors remain weak, limiting their contribution to overall economic activity.

Tourism faces significant setback

Services growth is expected to be weaker than previously forecast as tourism activity has declined sharply.

International tourist arrivals fell 47.9% year-on-year to 1.8 million in the first half of 2026, leaving arrivals at only slightly more than half their pre-pandemic level.

ADB said continuing geopolitical tensions and the closure of the Cambodia-Thailand land border have added pressure on tourism-related activities, including transportation, hospitality and trade.

The tourism slowdown is therefore a major factor behind the bank’s downward revision of Cambodia’s 2026 growth outlook.

Agriculture provides limited support

Agriculture is expected to make a relatively modest contribution to economic growth, supported by export demand for products including cashew nuts, cassava and rice.

However, the overall outlook remains subject to downside risks.

ADB identified potential disruptions from adverse weather conditions associated with a possible El Niño event toward the end of 2026 and into early 2027 among the risks facing the economy. The bank’s regional outlook also identifies geopolitical tensions, energy-market disruptions and a potentially strong El Niño as significant risks to growth and inflation.

Despite the downgrade, ADB expects Cambodia’s economy to regain some momentum in 2027, with manufacturing, export diversification and foreign investment providing important support.

The September 2026 Asian Development Outlook forms part of ADB’s latest assessment of economic conditions across developing Asia and the Pacific.