World Bank Lowers Cambodia’s Economic Growth Forecast to 4% for 2025 Amid Global Challenges

• 12 June 2025
• Local News
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In a pivotal update on Cambodia’s economic landscape, the World Bank has downgraded its growth forecast for 2025 from a promising 5.5% to a more tempered 4%. This revision, announced on 11 June, reflects a broader pattern acknowledged by both the Cambodian government and the ASEAN+3 Macroeconomic Research Office (AMRO), as they pinpoint similar trends influenced by a myriad of global and domestic challenges.

The latest Cambodia Economic Update, titled “Coping with Uncertainty and Strengthening Revenues for Cambodia’s Future,” sheds light on several key factors contributing to this economic slowdown. The report outlines critical elements such as global economic uncertainty, shifting trade policies, a deceleration in the property sector, and a tightening credit cycle—all compounding signs of a rattled growth trajectory. The World Bank anticipates that growth will remain subdued in 2026, projected at 4.5%, further underscoring the challenges ahead.

“To sustain economic growth during these uncertain times, Cambodia must prioritise diversifying its economy and fostering an environment that attracts private sector investment and job creation,” emphasised Tania Meyer, the World Bank’s Country Director for Cambodia. Meyer stressed the urgency of economic diversification, noting the need to move beyond the country’s heavy reliance on the construction and garment sectors by embracing higher value-added manufacturing and services.

In addition to diversification, Meyer highlighted the critical role of revenue reforms in cultivating a business-friendly climate that can generate necessary fiscal space for investment in vital sectors such as human resources and infrastructure development.

Originally, at the close of last year, the World Bank had projected a more optimistic growth trajectory for Cambodia, forecasting growth rates of 5.5% for both 2025 and 2026, alongside earlier predictions of 5.3% for 2024 and 5% for 2023. (Read more)

Last moment, the Government of Cambodia and experts at AMRO had also adjusted their growth forecasts downward, predicting 5.2% and 4.9% growth for 2025, respectively. (Read more and more)

As Cambodia navigates these precarious economic waters, the emphasis on cultivating an enabling environment for private sector investment and job creation has never been more crucial. Collaborative efforts among all stakeholders are essential to devise strategies that will reinforce economic resilience and promote sustainable growth amidst a rapidly changing global landscape.

Continued adaptability and proactivity will be paramount in addressing emerging challenges while simultaneously exploring new avenues for sustainable economic advancement.

By harnessing a collective approach and remaining vigilant, Cambodia can lay the groundwork for a more robust and diversified economic future, ensuring it remains resilient in the face of evolving global dynamics.

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