NBC raises Cambodia’s FY25 growth forecast to 6.2 percent
NBC raises Cambodia’s FY25 growth forecast to 6.2 percent
Cambodia’s economic growth is expected to reach 6.2 percent, and inflation will remain at a moderate level of 2.6 percent in 2025, according to an annual report from the National Bank of Cambodia (NBC) released on Monday.
NBC’s projections are higher than the World Bank’s forecast that Cambodia’s Gross Domestic Product (GDP) growth will marginally improve to 5.5 percent, and the Asian Development Bank (ADB) predicted Cambodia’s economy at 6.0 percent for this year.
The NBC report stated that economic activity will continue to be driven primarily by the growth of garment exports and the expansion of non-garment products, while tourism and agriculture show steady progress. However, the construction and real estate sectors remain weak.
However, it added Cambodia may also face several risks, mainly external ones, including uncertainty surrounding US protectionist policies, lower-than-expected growth in regional and global economies, instability in international financial markets, slowing economic growth in China, and the effects of climate change.
Additionally, Cambodia’s graduation from Least Developed Country (LDC) status may lead to the loss of certain export privileges and foreign financing sources, potentially putting pressure on the country’s economic growth.
Chea Serey, Governor of NBC, stated in the report that Cambodia’s economic growth is projected to continue recovering through 2025.
She said, “This growth will be primarily supported by an increase in exports, tourism, and foreign direct investment flows.” However, inflation may rise slightly due to expected increases in domestic demand and international oil prices.
Low inflation and stable exchange rates will continue to contribute to macroeconomic stability and confidence in the Cambodian economy, she added.
However, Serey said Cambodia’s economy may also face risks in the short and medium term, which could lead to a slowdown, particularly due to external factors.
“Geopolitical tensions and protectionist policies are expected to rise, leading to a decline in international trade, higher global inflation, and a slower pace of interest rate cuts in major developed countries. All of these factors may affect exports, investment, inflation, and pressure on the exchange rate in Cambodia,” she explained.
Meanwhile, the ongoing slowdown in China’s economy, caused by the prolonged property crisis and weak domestic demand, could reduce investment and tourism flows to Cambodia.
In particular, Cambodia’s exit from Least Developed Country (LDC) status, with a transitional period until 2029, may cause it to lose some preferential treatments, such as low-interest lending assistance or export tax exemptions, Serey added.
In addition, domestic risks include the slow recovery of the construction and real estate sectors and the increase in non-performing loans in the banking and financial sectors, she said.
Serey emphasized, “In line with economic growth and changes in international financial regulation, strengthening governance, risk prevention, and maintaining business sustainability, along with human resource development, gender promotion, and internal structural adjustments, are critical for the long-term development of NBC.”
“These efforts are aimed at continuing to contribute to the achievement of its primary mission of maintaining price stability under the motto of riel, stability, and development.
“At the same time, NBC will continue to implement the financial sector development strategy, in alignment with the Pentagonal Strategy – Phase 1, the National Development Plan, and the Royal Government’s sectoral development strategies.
“These efforts aim to achieve a banking system characterized by integration, resilience, diversity, modernity, and innovation,” Serey said.
To achieve the projected economic growth rate, economist Duch Darin told Khmer Times that Cambodia should continue developing hard infrastructure, including roads, ports, and energy systems, to lower logistics costs and attract more foreign direct investment. Additionally, the country should expand free trade agreements and enhance the ease of doing business to encourage investment in high-value industries.
Improving human capital through vocational training and digital literacy will help make the Cambodian workforce more productive. Promoting green products, sustainable agriculture, and eco-friendly tourism should also be a priority, he added.
“To control inflation, Cambodia should maintain prudent liquidity management, continue stabilizing the exchange rate, and enhance agricultural productivity to ensure stable prices,” Darin said.
“For economic expansion, Cambodia should diversify beyond traditional agricultural products and garments, accelerating growth in electronics and automotive parts.
“To attract more tourists, the country should continue improving infrastructure, such as roads and bridges, while promoting eco-tourism and leveraging its rich cultural heritage, including Angkor Wat and natural attractions,” he added.
In agriculture, upgrading farming techniques, enhancing water irrigation infrastructure, and supporting farmers in accessing markets with fair crop prices will be crucial, Darin said, adding that, strengthening digital infrastructure and fostering innovation will also create more economic opportunities for citizens.
Similar to NBC’s forecast, Cambodia’s economy is projected to grow at a rate of 6.3 percent in 2025, according to a report on the Budget in Brief report for the Fiscal Year 2025, recently released by the Ministry of Economy and Finance.
This growth is expected to increase the current GDP at current prices to approximately 209.16 trillion riels, equivalent to about $51.39 billion, the report stated. Meanwhile, GDP per capita is anticipated to reach $2,924.
