Cambodia’s Economic Growth To Accelerate In 2024, Fueled By Manufacturing And Tourism, Says ADB

Phnom Penh, April 11, 2024 --

Cambodia’s economy is forecast to grow at 5.8 percent in 2024 and 6.0 percent in 2025, fueled by a further rebound in tourism and strong manufacturing prospects, according to the latest edition of the Asian Development Bank’s (ADB) flagship economic report released on April 11.

"Despite global economic challenges, Cambodia’s economy performed well in 2023,” said ADB Country Director for Cambodia Ms. Jyotsana Varma. “We expect growth to be robust in 2024-2025, with the garments, footwear, and travel goods (GFT) sector poised for a significant upturn building on the positive momentum during the last quarter of 2023.”

The Asian Development Outlook (ADO) April 2024 estimated growth of 5.0 percent in 2023, driven by a robust recovery in tourism and solid activity in manufacturing outside the GFT sector. The report forecasts continuing economic expansion in 2024–2025, supported by stronger export-oriented manufacturing. It also expects inflation, which averaged 2.1 percent in 2023 mainly on falling global energy prices, to remain low at around 2.0 percent over the next two years.

The government aims for gradual fiscal consolidation from 2024 to rebuild pandemic-diminished reserves. Yet, challenges such as potential global economic slowdowns, rising private debt, fluctuating energy prices, and climate vulnerabilities could impact the outlook longer-term.

“These challenges add layers of complexity to Cambodia’s economic narrative,” said Ms. Varma. “But, the country is moving ahead with cautious optimism.”

The report also discusses Cambodia’s strategic preparations to graduate from the least-developed country (LDC) category, as designated by the United Nations, in 2027. It notes that graduation will improve the country’s international standing and investment attractiveness, but simultaneously pose challenges from reduced access to concessional financing and preferential trade treatments that propel sectors contributing to high growth and employment.

To effectively navigate this transition, the report stresses the importance of Cambodia enhancing its global economic integration, diversifying markets, focusing on higher value-added products, investing in sustainable infrastructure and human capital, and strengthening domestic resource mobilisation.

Recently, Cambodia was ranked by Seasia Stats as the fastest growing economy in Southeast Asia, and third in Asia in 2024 by basing on the International Monetary Fund (IMF)’s October 2023 Outlook and January 2024 update, which forecasted Cambodia’s economic growth at 6.1 percent this year.

For the government side, Cambodian economy remains robust with a projected growth rate of 6.6 percent in 2024, up from 5.6 percent last year, while the World Bank has forecasted that the Kingdom’s economy would grow at 5.8 percent this year.