WB moderates Cambodia’s 2026 GDP growth forecast to 3.9%

WB moderates Cambodia’s 2026 GDP growth forecast to 3.9%

An economist, however, says that Cambodia’s economy is fundamentally resilient, as export volumes and foreign direct investment in the first two months of 2026 continued to rise, reflecting strong investor confidence in the Kingdom’s macroeconomic management.

Cambodia’s economic growth is expected to slow to 3.9 percent in 2026, a downward revision of 0.4 percentage points from the 4.3 percent forecast in October, after the country achieved 4.8 percent growth last year, the World Bank (WB) reported yesterday.

The projection was published in ‘The East Asia & Pacific Economic Update: Industrial Policy in the Digital Age’, which was launched by Carlos Felipe Jaramillo, EAP Vice-President of the World Bank Group.

According to the report, Cambodia’s GDP is projected to grow around 3.9 percent this year, before rebounding to 4.9 percent in 2027. The 2026 figure reflected a downward revision of 0.4 percentage points from the 4.3 percent forecast issued in October 2025.

The projected growth placed Cambodia second-highest among its neighbouring countries, behind Vietnam at 6.3 percent and ahead of Lao PDR at 3.5 percent. Meanwhile, Thailand is forecasted to grow just 1.3 percent, the second lowest in the EAP region after Micronesia at 0.8 percent.

During the virtual briefing, Jaramillo highlighted three key messages from the report. First, rising oil and energy shocks are expected to weigh on growth across the region, with impacts differing depending on countries’ reliance on energy imports and the available policy space to respond.

He said, “While many economies in the EAP enter this period with relatively strong macro fundamentals, others face high inflation, limited fiscal space, or high debt vulnerability. As a result, our report projects regional growth to slow to 4.2 percent in 2026, down from 5.0 percent last year.”

The EAP Vice-President noted that prolonged shocks could further dampen growth and disproportionately affect poor households through higher living costs, potentially raising unemployment.

“The second message is also a positive story around artificial intelligence (AI) driven opportunities in our region,” he said, noting that the global AI boom is reshaping technology supply chains and spurring investment.

Jaramillo explained that some economies, led by Vietnam and Malaysia, are emerging as important exporters of AI-related products. “With further investment in connectivity, digital infrastructure, and skills, we believe broader AI adoption across the region can accelerate productivity growth and support long-term development.”

Finally, Jaramillo emphasised how well-designed industrial policy can boost growth and create more productive jobs. “Jobs have been the focus of the World Bank Group over the last year and a half,” he said.

He stressed that key priorities include strengthening foundational public goods to remove policy distortions that constrain competition and deploying targeted interventions carefully and sequentially. “Getting this sequentially right is essential to ensure that policies raise productivity and support sustainable job creation,” he added.

Speaking to Khmer Times, leading economist Duch Darin said the World Bank’s revision of Cambodia’s growth forecast was based on global geopolitical uncertainty, particularly the impact of conflicts in the Middle East.

However, we should continue to monitor the situation closely over the next two weeks, as crude oil prices have declined following the fragile ceasefire agreement between the US and Iran, which could reduce import costs and lower inflation in the short term,” he said.

Darin noted that Cambodia’s economy remains preliminary resilience, as export volumes and foreign direct investment in the first two months of 2026 continued to rise, reflecting strong investor confidence in the Kingdom’s macroeconomic management and diversification efforts to reduce external pressures.

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