Phnom Penh, September 23, 2026 — The Asian Development Bank (ADB) has lowered its forecast for Cambodia’s economic growth in 2026 to 3.9%, citing weaker tourism activity and related services, while projecting a recovery to 4.7% in 2027 as manufacturing exports, investment and economic diversification support the economy.
The latest Asian Development Outlook September 2026 represents a downgrade from ADB’s July forecast of 4.1% growth for Cambodia in 2026. The bank’s 2027 projection remains at 4.7%.
ADB also raised its inflation forecast for Cambodia to 4.7% in 2026, before expecting inflation to moderate to 2.8% in 2027.
Tourism Weakness Weighs on Growth
The main reason for the downward revision is weaker tourism activity and its impact on Cambodia’s services sector.
International visitor arrivals fell 47.9% year on year to 1.8 million during the first six months of 2026, according to the latest outlook cited in the report.
The decline has affected tourism-related businesses and industries, including hospitality, transportation, retail and cross-border trade.
ADB has linked Cambodia’s weaker tourism outlook to geopolitical tensions and the prolonged closure of the Cambodia-Thailand land border.
Tourism remains an important source of employment and foreign-exchange earnings for Cambodia, meaning a prolonged slowdown could continue to affect businesses and workers dependent on international visitors.
Manufacturing Becomes an Increasingly Important Growth Driver
While tourism has weakened, manufacturing continues to provide support for Cambodia’s economy.
Non-garment manufactured exports increased 38.4% year on year during the first half of 2026, reflecting stronger diversification into products such as:
- Electrical components
- Vehicle parts
- Tires
- Wooden goods
Garment exports also remained an important contributor, rising 6.3% to $8 billion during the first half of the year.
The figures indicate that Cambodia’s export base is gradually broadening beyond traditional garment manufacturing.
ADB said continued investment inflows should help expand production capacity and strengthen Cambodia’s integration into regional and global supply chains.
Growth Expected to Recover to 4.7% in 2027
Despite the weaker 2026 outlook, ADB expects Cambodia’s economy to regain momentum next year.
Growth is projected to reach 4.7% in 2027, supported by manufacturing, export diversification and continued foreign direct investment.
ADB Country Director for Cambodia Yasmin Siddiqi said Cambodia’s economy continues to demonstrate resilience, with manufacturing exports and investment helping offset challenges in tourism.
She also highlighted the importance of further economic diversification and competitiveness reforms to sustain inclusive growth.
Inflation Forecast Raised to 4.7% in 2026
Inflation is another concern in the latest outlook.
ADB expects Cambodia’s inflation to average 4.7% in 2026, significantly higher than its previous forecast, before easing to 2.8% in 2027.
Consumer price pressures increased sharply earlier in the year, with inflation rising from 2.6% in February to 7.2% in May, before moderating to 5.5% in July, according to the latest report.
Higher global oil prices and rising import costs are contributing to the pressure.
Cambodia’s reliance on imported fuel and other essential products leaves domestic prices sensitive to international commodity and transportation costs.
Fuel Measures and Stable Riel Could Limit Price Pressure
ADB expects fuel tax relief measures and a broadly stable Cambodian riel to help contain some of the inflationary pressure.
However, higher energy and import costs remain a concern for households and businesses.
For companies, higher fuel and imported-input costs can increase transportation, manufacturing and operating expenses. For households, persistent price pressures can reduce purchasing power.
The expected decline in inflation to 2.8% in 2027 would represent a significant moderation if energy and other commodity pressures ease as projected.
Government Spending to Support the Economy
Fiscal policy is expected to remain supportive as Cambodia responds to weaker tourism and external pressures.
ADB highlighted government investment in:
- Infrastructure
- Human capital
- Social protection
The Comprehensive Intervention Program is also identified as an important mechanism for directing support toward the economy and vulnerable households.
Such measures are expected to help maintain domestic economic activity while the tourism sector remains under pressure.
Current Account Deficit Expected to Widen
Cambodia’s current account deficit is expected to widen in 2026.
Higher import costs combined with weaker tourism revenue are expected to put pressure on the external balance.
However, continued foreign direct investment is expected to provide support for Cambodia’s international reserves.
This creates an important distinction between Cambodia’s trade and investment flows: weaker tourism receipts can put pressure on the current account, while continued investment inflows can help support external financing.
Agriculture Provides Some Support
Agriculture is expected to make a modest contribution to economic growth.
The report points to continued external demand for agricultural products including:
- Cashews
- Cassava
- Milled rice
Agriculture remains particularly important for rural households, meaning agricultural performance can influence both economic growth and household incomes.
However, the outlook also faces weather-related risks.
El Niño Adds Another Risk
ADB has identified potential El Niño-related weather disruptions in late 2026 and early 2027 as a downside risk.
A strong El Niño could affect agricultural production and rural livelihoods, while also creating additional pressure on food prices and energy demand.
The broader September ADB outlook identifies a potentially strong El Niño as one of the major risks facing economies across Asia and the Pacific.
Other risks include prolonged geopolitical tensions, elevated energy prices, tighter financial conditions and continued uncertainty affecting international trade.
Cambodia’s Economic Forecast at a Glance
| Indicator | 2026 | 2027 |
|---|---|---|
| GDP growth forecast | 3.9% | 4.7% |
| Inflation forecast | 4.7% | 2.8% |
| Tourism outlook | Weak | Expected to recover |
| Manufacturing | Major growth driver | Expected to remain supportive |
| FDI | Supportive | Expected to remain important |
| Main risks | Tourism weakness, energy costs, geopolitics, weather | Geopolitical, energy and weather risks |
Key Economic Indicators
| Indicator | Latest Figure |
|---|---|
| ADB 2026 GDP forecast | 3.9% |
| Previous ADB July 2026 GDP forecast | 4.1% |
| ADB 2027 GDP forecast | 4.7% |
| 2026 inflation forecast | 4.7% |
| 2027 inflation forecast | 2.8% |
| H1 2026 international arrivals | 1.8 million |
| Change in international arrivals | -47.9% |
| H1 2026 non-garment export growth | 38.4% |
| H1 2026 garment exports | $8 billion |
| February inflation | 2.6% |
| May inflation | 7.2% |
| July inflation | 5.5% |
What the Forecast Means for Cambodian Businesses?
The revised outlook points to an economy undergoing a significant shift in its growth composition.
Tourism and related services are facing weaker conditions, while manufacturing and investment are becoming increasingly important sources of economic activity.
For manufacturers and exporters, continued growth in non-garment exports could create opportunities in sectors such as electronics, automotive components and other higher-value production.
For tourism-dependent businesses, however, the weaker visitor outlook creates a more challenging operating environment.
Higher inflation also means businesses will need to manage energy, transportation and imported-input costs carefully.
Angkor Times Analysis
The ADB revision highlights a two-speed Cambodian economy in 2026.
Tourism is experiencing a sharp contraction, while manufacturing exports are expanding rapidly. The 38.4% increase in non-garment manufactured exports is particularly important because it indicates that Cambodia’s economic diversification is becoming increasingly visible in actual trade performance rather than remaining solely a policy objective.
However, the tourism decline is substantial. A 47.9% fall in international arrivals during the first half of the year has implications well beyond hotels and airlines. Restaurants, transportation providers, retailers, tour operators and communities dependent on visitor spending can also be affected.
The inflation outlook adds another layer of pressure. A 4.7% average inflation forecast for 2026, followed by 2.8% in 2027, suggests that price pressures may remain elevated in the short term before easing.
The key issue for Cambodia is therefore the pace at which manufacturing, investment, agriculture and other sectors can compensate for weaker tourism and services activity.
The ADB forecast also illustrates why diversification matters. Cambodia’s stronger manufacturing exports and continued investment inflows provide buffers against a tourism downturn, but external shocks such as energy-price volatility, geopolitical tensions and weather disruptions remain important risks.
The 2027 recovery forecast should therefore be viewed as an economic projection rather than a certainty. Its realisation will depend on tourism recovery, export performance, investment flows, domestic demand and the evolution of global energy and geopolitical conditions.
Frequently Asked Questions
What is ADB’s latest growth forecast for Cambodia in 2026?
ADB has lowered its 2026 growth forecast to 3.9%, from 4.1% in its July outlook.
What does ADB forecast for Cambodia in 2027?
Economic growth is projected at 4.7% in 2027.
Why did ADB lower its 2026 forecast?
The main factor highlighted in the latest report is weaker tourism activity and related services, alongside broader geopolitical and economic pressures.
What is Cambodia’s inflation forecast for 2026?
ADB expects average inflation of 4.7% in 2026.
What is the inflation forecast for 2027?
Inflation is projected to moderate to 2.8% in 2027.
Which sector is currently supporting Cambodia’s growth?
Manufacturing remains a major growth driver. Non-garment manufactured exports increased 38.4% year on year in the first half of 2026.
How badly has tourism declined?
International visitor arrivals fell 47.9% year on year to 1.8 million during the first six months of 2026, according to the latest outlook.
What are the main risks to Cambodia’s outlook?
Key risks include continued tourism weakness, geopolitical tensions, elevated energy and import costs, tighter financial conditions and potential El Niño-related disruptions to agriculture.