Ministry of Economy Lowers Cambodia’s Growth Forecast for 2025

• 26 August 2025
• Local News
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In a significant update, the Ministry of Economy and Finance has revised its economic growth forecast for Cambodia from 6.3% to 5% for the year 2025. This adjustment was revealed in a report detailing the budget’s first half implementation and the assessment of financial management laws for the upcoming year.

The downgrade comes in response to a challenging economic backdrop characterized by a 19% US tariff rate on exports and escalating tensions due to armed conflict along the border with Thailand. These factors are anticipated to substantially impact the national economic landscape.

Despite these hurdles, the ministry did provide some encouragement, noting that the industrial sector is projected to grow by 7.1%. However, this marks a slight decline from previous forecasts, primarily driven by downturns in both the garment and non-garment manufacturing sectors.

The garment industry is expected to achieve a growth rate of 10.1%, albeit marginally lower than earlier predictions. On the other hand, the non-garment manufacturing sector is forecasted to grow by just 6.9%, facing challenges from ongoing border conflicts that disrupt the flow of raw materials and the adverse effects of US tariff policies on exports.

While the border issues present significant challenges, the ministry indicated that they are not likely to cause major disruptions to the overall supply chain. Many businesses have adapted by shifting their transportation methods to utilize waterways and air freight.

Additionally, the National Bank of Cambodia has also revised its growth forecast downward for the first half of 2025, now estimating it will be around 5.9%. Earlier projections had anticipated a more optimistic economic performance, spurred by strong export growth in apparel, textiles, and agricultural products, along with positive trends in the services sector. (Read more)

As Cambodia grapples with these economic challenges, stakeholders are keenly focused on mitigating impacts and exploring avenues for sustainable growth moving forward.

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