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The Asian Development Bank (ADB) has cut Cambodia’s 2026 growth forecast to 3.9% from 4.1%, citing weaker-than-expected tourism and related services. The government’s forecast is not much different, while sharing concerns over the impact on livelihoods, employment and living costs.
The revised projection in ADB’s September 2026 Asian Development Outlook (ADO) reflected weaker tourism activity that has weighed on the services sector, but the growth is expected to recover to 4.7% in 2027, supported by resilient manufacturing, continued export diversification and foreign direct investment.
“Cambodia’s economy continues to demonstrate resilience,” ADB Country Director for Cambodia Yasmin Siddiqi said in a press release. “Strong manufacturing exports and buoyant investment inflows are helping offset tourism sector challenges. Continued efforts to diversify the economy, enhance competitiveness, support vulnerable households, and strengthen resilience will be important for sustaining inclusive growth.”
According to the ADO, garment exports rose 6.3% year-on-year (YoY) to $8 billion in the first half of 2026, while exports of other manufactured goods increased 38.4% to $6.7 billion. The growth reflected continued diversification into higher-value products, including wooden goods, electrical components, vehicle parts and tires. The US and Europe remained Cambodia’s largest export markets.
However, weak tourism is expected to weigh on services growth. International visitor arrivals fell 47.9% YoY to 1.8 million in the first half of 2026. ADB attributed the decline to the Middle East conflict, Cambodia-Thailand land border closure and concerns about the transnational scam industry.
Meanwhile, other sectors like agriculture are expected to make a modest contribution to growth, supported by export demand for cashews, cassava and milled rice. But, ADB said risks to the outlook remain tilted to the downside, including the possibility of El Niño-related weather disruptions in late 2026 and early 2027.
ADB also raised its inflation forecast, citing higher global oil prices and increased import costs. It projected inflation of 4.7% in 2026 and 2.8% in 2027, with fuel tax relief and a broadly stable riel expected to help contain further price pressures.
Fiscal policy is expected to remain supportive, with spending on infrastructure, human capital and social protection under the government’s Comprehensive Intervention Program helping to sustain economic activity. ADB added that the continued foreign direct investment is also expected to support Cambodia’s external position and international reserves.
Meas Soksensan, spokesperson for the Ministry of Economy and Finance (MoEF), told CamboJA News that the government “does not view it (ADB’s projection) as a significant difference” from its own forecast, saying the government has been closely monitoring developments across sectors, from tourism to manufacturing.
Cambodia’s economy is projected to grow around 4.1% in 2026.
Soksensan said the government’s main concern is not simply the growth figure itself, but its “real-world” impact on employment, people’s livelihoods, prices of goods, energy costs and businesses’ ability to continue operating.
“The government has already identified these risks and introduced a number of intervention measures,” he added. “These include reducing the tax burden on fuel, subsidizing fuel prices, reducing VAT and certain related taxes, and measures to help lower the cost of living.”
The government launched the “Comprehensive Intervention Program in Response to a Multi-crises Situation” earlier this month, with planned spending of more than $1.2 billion to stabilize livelihoods and strengthen Cambodia’s economic and social resilience in the short and medium term.
In August, the government introduced the RISE program, backed by ADB financing of $250 million, to support economic stability, mitigate the impact of fuel prices, assist vulnerable households and support the green transition.
This week, the government would begin cash transfers to poor, vulnerable and at-risk households on September 25 to help offset rising fuel and gas prices. The additional subsidy ranges from 40,000 to 60,000 riel per household, plus 5,000 riel per family member depending on location. It will be paid in four installments through December 2026.
Meanwhile, Soksensan said the government considers tourism an urgent issue because its impact extends beyond hotels and restaurants to aviation, transportation, commerce, retail and employment.
“At present, there are both mechanisms and concrete solutions in place,” he said. “The government is not focusing solely on attracting more tourists, but also on the entire economic chain connected to tourism. The Prime Minister has already emphasized support for tourism investment.”
He added that measures would include market promotion, improving air connectivity, facilitating travel, investing in new tourism products, and supporting businesses and communities that depend on the sector.
Ky Sereyvath, an economist at the Royal Academy of Cambodia, said economic growth of around 4% was driven largely by exports, particularly the garment sector. However, he said growth for local businesses and citizens appeared stagnant, especially in retail, wholesale and services.
“In this sense, those who are most affected are citizens engaged in local trading businesses,” he said. “Secondly, it is the importers, as Cambodia’s domestic market is facing challenges.”
