ADB lowers Cambodia’s 2026 growth outlook to 3.9% on slower tourism

The Asian Development Bank has lowered its 2026 growth forecast for Cambodia to 3.9%, down from 4.1% in July, because tourism and services linked to it have been weaker than expected.

In its September 2026 Asian Development Outlook, published on September 23, the bank also said growth is expected to improve to 4.7% in 2027. It pointed to resilient manufacturing, a wider export mix and continued foreign direct investment as the main supports for that recovery.

ADB country director for Cambodia Yasmin Siddiqi said the economy had continued to show resilience. She said strong manufacturing exports and lively investment inflows were helping to absorb problems in tourism, while diversification, competitiveness, support for vulnerable households and greater resilience would remain important for inclusive growth.

Inflation outlook raised

The ADB also lifted its inflation forecasts, citing higher global oil prices and increased import costs. Inflation rose from 2.6% year on year in February to 7.2% in May before slowing to 5.5% in July.

The bank now expects inflation to average 4.7% in 2026 and then fall to 2.8% in 2027. It said fuel tax relief and a broadly stable riel should help ease price pressures.

Fiscal policy is expected to stay supportive, with infrastructure, human capital and social protection spending under the “Comprehensive Intervention Program” helping sustain activity.

Trade, tourism and agriculture

The current account deficit is expected to widen in 2026 as import costs rise and tourism earnings fall. Continued strong foreign direct investment, however, should support international reserves.

Industry remains the main engine of growth. Non-garment manufactured exports grew 38.4% year on year in the first half of 2026, reflecting diversification into higher-value goods such as electrical components, vehicle parts, tyres and wooden products.

Garment exports rose 6.3% to $8 billion, while construction and real estate activity remained subdued.

The services sector is now expected to perform less well than previously forecast as tourism continues to weaken. International visitor arrivals fell 47.9% year on year to 1.8 million in the first half of 2026, leaving them just above half of pre-pandemic levels, according to the ADB.

The bank said ongoing geopolitical tensions and the closure of the Cambodia-Thailand land border have weighed on tourism-linked transport, hospitality and trade.

Agriculture is expected to contribute modestly, helped by export demand for cashews, cassava and milled rice.

Downside risks

The ADB said risks to the outlook remain tilted to the downside. It specifically pointed to the possibility of El Niño-related weather disruptions in late 2026 and early 2027.