AMRO Preliminary Assessment on Cambodia: Proactive Policies Essential for Resilience Amid Strong Headwinds

The ASEAN+3 Macroeconomic Research Office (AMRO) has released a preliminary assessment on Cambodia, following an annual consultation visit to the Kingdom from April 20–29, 2026, led by Lead Economist, Jinho Choi, with participation from AMRO Director/CEO, Yasuto Watanabe, and Chief Economist, Dong He. 

In a press release issued on April 30, AMRO's assessment determined that Cambodia’s economy proved to be relatively resilient against external shocks in 2025, with economic growth moderated to an estimated 5.3 per cent in 2025, and projected to slow further to 4.3 per cent in 2026, as higher global oil prices weigh on the economy.

AMRO stressed that managing heightened uncertainties and repeated shocks will require proactive policies and effective implementation, including targeted fiscal support to vulnerable households and firms affected by the energy shock and the border conflict, and preemptive measures to address banking sector vulnerabilities, particularly elevated non-performing loans (NPLs).

Economic Developments and Outlook

“Despite heightened uncertainty surrounding U.S. reciprocal tariffs, Cambodia’s economy grew steadily in 2025, supported by strong garment exports, steady FDI inflows, and swift policy responses,” said Choi. “Looking ahead, proactive and targeted policy support, together with structural reforms, will be important to sustain medium-term growth.”

Inflation averaged 2.5 per cent in 2025 but is expected to rise to 3.9 per cent in 2026 due to higher global oil prices.

The current account shifted to a deficit of 3.6 per cent of GDP in 2025 and projected to widen further to 8.5 per cent of GDP in 2026, reflecting higher energy imports, weaker tourism receipts, and a sharp decline in remittances following the return of migrant workers from Thailand. Meanwhile, FDI inflows remained resilient.

Credit growth improved to some extent but remained relatively slow in 2025, while the NPL ratio remained elevated at above 8 per cent. The real estate sector also continued to face persistent oversupply and subdued demand.

The fiscal deficit narrowed to 1.0 per cent of GDP in 2025 due to stronger revenue collection and contained spending. However, the deficit is projected to widen in 2026 because of higher spending related to border security and elevated oil prices. Public debt remained low and stable at below 30 per cent of GDP.

Risks, Vulnerabilities, and Challenges

High oil prices remain the most immediate external risk. Slower growth in major trading partners, driven by spillovers from the Middle East conflict or renewed trade protectionism, could further weaken exports and investment.

Banking sector vulnerabilities have increased amid rising NPLs and recent bank liquidations.

Uncertainty surrounding the border conflict also poses downside risks to economic activities.

Cambodia’s graduation from least developed country (LDC) status by end-2029 could reduce export competitiveness and raise borrowing costs if not managed carefully.

Policy Recommendations

Policy priorities should focus on strengthening resilience while supporting growth.

Fiscal policy should remain flexible and targeted, including temporary support measures to cushion the impact of higher energy prices and border disruptions. Over the medium-term, rebuilding fiscal buffers should remain a priority.

Monetary and financial policies should continue to support economic activity while remaining vigilant to inflation and financial stability risks. The National Bank of Cambodia (NBC) should maintain an accommodative policy stance, strengthen credit intermediation through targeted measures, accelerate NPL resolution, reinforce bank capital buffers, and enhance liquidity oversight and bank resolution framework.

Structural reforms should focus on enhancing energy and food security, diversifying export markets, strengthening infrastructure, and promoting exports with higher domestic value-added to support stronger medium-term growth. Expedited labour market and social protection measures would help mitigate the impact of the border conflict and support returnees’ reintegration into the local labor market as productive members of the workforce.

This press release was supplied.