Cambodia’s economic momentum is facing fresh headwinds as the World Bank revised its 2025 GDP growth forecast down to 4%, from an earlier estimate of 5.5%. The downgrade reflects persistent weakness in the real estate sector, external demand uncertainties, and mounting stress within the financial system.

While exports have shown resilience—particularly in garments, footwear, and bicycles—growing global trade frictions and subdued Western demand are weighing on manufacturing. The recovery in international tourism has offered some support, but it has not been sufficient to offset broader structural vulnerabilities.

Household consumption is beginning to rebound, as seen in the uptick in imports of vehicles, food, and consumer goods. However, rising non-performing loans—now close to 8% in the banking sector and higher in microfinance—have raised concerns about credit quality and financial stability.

The World Bank highlighted Cambodia’s heavy reliance on construction and real estate, sectors that have slowed significantly amid declining foreign investment and tighter credit conditions. Analysts warn that a prolonged property downturn could spill over into broader economic risks if left unaddressed.

Authorities have pledged to strengthen financial sector oversight, improve legal frameworks for insolvency and debt resolution, and diversify the economy. Cambodia’s foreign reserves remain robust, currently covering about seven months of imports, offering some buffer against shocks. Still, policymakers face mounting pressure to implement reforms that can sustain growth in an increasingly fragile global landscape.

References

World Bank. Cambodia Economic Update, June 2025.
VietnamPlus. “World Bank downgrades Cambodia’s economic growth forecast”, 14 June 2025.
bne IntelliNews. “World Bank cuts Cambodia’s GDP growth forecast to 4% for 2025”, 12 June 2025.
Khmer Times. “Non-performing loans rise as economic pressures build”, 11 June 2025.