ADB flags shocks to Cambodia growth

The Asian Development Bank said Cambodia’s economy is still growing, but three outside shocks could knock that expansion off course in 2026. (adb.org) ADB said on April 10 that Cambodia’s gross domestic product would grow 4.5% in 2026 under an “early stabilization” scenario for the Middle East, after an estimated 5.2% in 2025 and 6.0% in 2024. It said growth could return to 5.0% in 2027 if external conditions improve. (adb.org; adb.org) The bank tied the warning to higher oil prices linked to the Middle East conflict, uncertainty over United States trade policy, and the continuing closure of the Thailand border, which has weighed on tourism, remittances, trade and services. A prolonged fuel shock, ADB said, would raise imported costs for agriculture, factories and travel. (adb.org; adb.org) Cambodia’s recent growth has become more exposed to those pressures because industry now carries more of the economy. ADB said industrial output grew an estimated 7.9% in 2025, helped by a 16.3% jump in garment exports and a 15.2% rise in other manufactured exports such as electrical parts, tires, bicycles and wooden goods. (adb.org) The weak point is services. ADB said services growth slowed to an estimated 3.4% in 2025 and is projected to slow again to 2.3% in 2026 as Cambodia adjusts to the Thailand border closure; international arrivals in 2025 fell 16.9%, even though arrivals from China rose 41.5%. (adb.org; adb.org) Prices are also moving the wrong way. ADB said inflation averaged 2.5% in 2025 after 0.8% in 2024 and is forecast to edge up to 2.8% in 2026 if commodity-price disruptions do not last, with food and fuel costs the main risk. (adb.org; adb.org) That is why ADB’s warning has focused on household buffers as much as headline growth. It said Cambodia’s fiscal deficit is expected to widen further in 2026 as spending rises, including support for vulnerable households, while revenue growth softens with the economy. (adb.org) Cambodia has been building that safety-net system for years. The government’s National Social Protection Policy Framework for 2024-2035 replaced the 2016-2025 framework, and it is meant to guide a broader, longer-term social protection system. (nspc.gov.kh) Existing programs already show the shape of that approach. UNICEF says Cambodia’s Family Package Programme combines cash support for poor and vulnerable households, including pregnant women, children, people with disabilities, older people and people living with HIV/AIDS, with a base payment of 34,000 riel, or about $8.30, a month plus top-ups. (unicef.org) ADB’s separate message is that safety nets will not carry growth on their own. Country Director Yasmin Siddiqi said manufacturing remains solid, but Cambodia still needs a more productive workforce, more skills training and more diversified investment to stay on its 2050 high-income target. (adb.org) For now, the bank’s forecast is not a recession call. It is a warning that Cambodia can still grow in 2026, but only if oil, trade and border shocks do not deepen faster than its factories, budget and social-protection system can absorb them. (adb.org; adb.org)