- Cambodia's economic growth is projected to moderate to 4.8 percent in 2025 from 6 percent in 2024, as the economy faces significant external headwinds from trade policy uncertainty and regional tensions. The outlook is subject to considerable downside risks.
- Fiscal policy should provide temporary and targeted support to vulnerable households and firms affected by the shocks, while a medium-term consolidation led by a credible revenue mobilization strategy is needed to rebuild fiscal buffers. Monetary and financial policies should focus on safeguarding financial stability.
- Accelerating structural reforms is crucial to diversify growth-drivers, improve competitiveness, and make the economy more resilient to shocks. Enhancing the business environment, strengthening governance, and investing in human capital will support sustainable and inclusive long-term growth.
Phnom Penh: An International Monetary Fund (IMF) team, led by Mr. Kenichiro Kashiwase, held discussions with the Cambodian authorities, private sector representatives, and developing partners from August 20 to September 2 for the 2025 Article IV consultation.
At the end of the mission, Mr. Kashiwase issued the following statement:
"Cambodia's economy performed strongly in 2024, with real GDP growth reaching 6 percent, supported by a robust rebound in garment and agricultural exports and a recovery in tourism. This momentum continued in early 2025. However, growth is expected to moderate to 4.8 percent in 2025 as trade tensions and the border dispute with Thailand—despite the recent ceasefire—begin to weigh on external demand, tourism, and remittance inflows. Inflation is expected to rise moderately to about 2.8 percent but remains contained.
"Risks to the outlook are heavily tilted to the downside. A sharper-than-expected escalation in trade and border tensions could further weaken exports, tourism, and growth. Domestically, financial sector vulnerabilities are a key concern. High private sector debt and rising NPLs, which have surpassed 7 percent—particularly in the tourism and real estate sectors—could lead to corporate and household financial stress and weigh on the recovery. On the upside, successful reintegration of returning workers into the domestic labor force could support consumption and mitigate some of the adverse growth effects.
"In this challenging environment, fiscal policy should provide temporary and targeted support to vulnerable households and displaced workers, while maintaining overall fiscal discipline. Over the medium term, a gradual, growth-friendly fiscal consolidation is essential to rebuild buffers and ensure long-term sustainability of public debt. A credible revenue mobilization strategy is a central priority. This should include reducing extensive tax exemptions and strengthening tax compliance to create space for critical spending on social protection, education, health, and infrastructure.
"Monetary policy should remain agile to navigate the uncertain economic environment. Continued efforts by the National Bank of Cambodia to modernize its monetary policy framework are important. These reforms will enhance policy effectiveness and are integral to advancing the de-dollarization strategy.
"Safeguarding financial stability is the priority for financial sector policies. The IMF team welcomes the authorities' plans to address rising NPLs. A carefully calibrated exit from regulatory forbearance is essential to navigate banks to adequately recognize provision for loan losses. Strengthening supervision of banks and non-bank financial institutions with high exposure to the real estate sector and enhancing the crisis management and bank resolution frameworks are also critical steps to maintain the stability of the economy.
"Sustaining Cambodia's economic development and resilience requires accelerating structural reforms that build productive capacity and diversify growth drivers. With Cambodia's impending graduation from Least Developed Country status by end-2029, there is a renewed urgency to improve productivity and competitiveness. Priorities should include enhancing the business environment by strengthening governance and anti-corruption efforts, improving the rule of law, property rights and access to information, strengthening social safety nets, and investing in human capital to support employment, attract foreign direct investment, and facilitate a shift toward higher value-added industries.
"Addressing data limitations, improving macroeconomic data quality, and enhancing inter-agency information sharing would benefit monitoring of the economy and policymaking. The IMF will continue to provide technical assistance to help improve statistics, and in other areas of capacity development.
"The IMF team held discussions with senior officials of the Royal Government of Cambodia, the National Bank of Cambodia, and other public agencies, as well as a wide range of stakeholders, including representatives of the business and banking sectors, and development partners. The team wishes to express its deep appreciation to the Cambodian authorities and other stakeholders for their warm hospitality and productive discussions."
