US tariff impact now weighs on growth forecast
US tariff impact now weighs on growth forecast
The Royal Government has lowered its GDP growth projection to around 5.2 percent in 2025 and 5 percent in 2026 from over six percent made earlier owing to the expected impact of US trade tariffs on Cambodian exports and the larger economy.
Before the announcement of tariffs, the growth projection stood around 6.3 percent for both 2025 and 2026 and around 6.5 percent for the medium term (2027-2028).
According to a report on the ‘Budget Strategy Plan 2026-2028 and the Preparation of the Finance Management Bill for 2026’, which was released on Saturday, Cambodia’s economic growth is projected at 5.2 percent for 2025 and 5 percent for 2026.
“The decrease is due to the expected impact of reciprocal tariffs policy on export-serving sectors,” read the report, which was approved by Prime Minister Hun Manet on May 20.
In addition, if the external situations worsen and the negotiations between Cambodia and the United States do not yield results as expected, the growth will further decline, added the report.
In the midst of these significant challenges, the Cambodian government has been accelerating the implementation of various policies and programmes crucial for driving economic growth in the medium and long term.
They include intensifying efforts related to the implementation of the “Pentagon Strategy – Phase 1” and the implementation of the “programme to promote competitiveness, increase diversification and strengthen resilience to promote economic growth in a global environment of high uncertainty”.
All efforts are aimed at increasing competitiveness, diversification, and strengthening socio-economic resilience.
The Cambodian Government anticipates positive results from its ongoing tariff talks with the US, as the Ad Hoc Cambodia-U.S. Bilateral Relations Coordination Working Group led by Sun Chanthol, Deputy Prime Minister and the First Vice-Chairman of the Council for the Development of Cambodia recently wrapped the first round of talks with the US.
According to the IMF’s latest forecast released in April 2025, the global economy is revised to grow by 2.8 percent and 3 percent in 2025 and 2026, a decline of approximately 0.5 and 0.3 percentage points, respectively, due to the impact and consequences of protectionist policies through broad-based tariff hikes and reciprocal tariffs.
- 10:29 26/05/2025
