The IMF has lowered Cambodia’s 2026 growth projection to 3.0 per cent, citing weaker tourism, higher energy costs, slowing exports and softer domestic demand, as the government rolls out a $1.22 billion stimulus package to support households and businesses.
The downgrade was issued following the IMF’s Article IV Consultation, which concluded in September.
The Fund said Cambodia’s near-term economic outlook has weakened, with several sectors facing simultaneous pressure from higher energy costs, weaker tourism and remittance flows, slower garment exports, subdued domestic demand and tighter financial conditions.
Inflation is expected to remain elevated at 5.6 per cent in 2026 before easing in 2027, according to the source.
Key Economic Figures
| Indicator | Figure |
|---|---|
| IMF 2026 growth projection | 3.0% |
| Inflation projection for 2026 | 5.6% |
| Cambodia's 2025 growth | 5.3% |
| ADB 2026 growth projection | 3.9% |
| Previous ADB projection | 4.1% |
| Government stimulus package | $1.22 billion |
| Estimated monthly state-revenue reduction from measures | $50 million |
| Potential jobs from local infrastructure projects | More than 220,000 |
| Planned electric tuk-tuk conversion | 60,000 |
Cambodia's Growth Outlook Weakens
The IMF said Cambodia's economy remained resilient during 2025, supported by manufacturing exports and foreign direct investment.
However, overall growth slowed to 5.3 per cent, with the economy also affected by a prolonged correction in the real estate sector and weaker land-based tourism following border tensions with Thailand.
The latest projection of 3.0 per cent for 2026 represents a significant slowdown from the growth recorded in 2025.
The IMF identified several factors contributing to the weaker outlook:
Higher energy costs
Weaker tourism activity
Lower remittance flows
Slower garment exports
Weak domestic demand
Tighter financial conditions
Continued real estate weakness
The combination suggests that Cambodia is facing pressure across multiple parts of the economy rather than from a single sector.
IMF Sees Risks Tilted to the Downside
The IMF said risks to Cambodia's growth outlook are tilted to the downside.
Potential energy and trade disruptions could add further pressure, while persistent scam activities and a sharper-than-expected deterioration in the real estate market could weigh on economic activity.
The Fund recommended a combination of targeted fiscal support, flexible monetary policy, balance-sheet repair and structural reforms to strengthen economic resilience.
Among its recommendations were:
Gradually phasing out broad fuel subsidies
Targeting support toward vulnerable households
Strengthening domestic revenue mobilisation
Tightening oversight of banks exposed to real estate
Improving financial-sector resilience
Advancing structural reforms
The recommendations reflect the IMF's assessment that Cambodia needs to manage immediate economic pressures while also addressing longer-term vulnerabilities.
ADB Also Lowers Cambodia's 2026 Forecast
The IMF's downgrade follows a separate reduction by the Asian Development Bank (ADB).
The ADB recently lowered its 2026 Cambodia growth projection to 3.9 per cent, from 4.1 per cent in July.
The ADB attributed the reduction to weaker-than-expected tourism and agriculture.
The bank also noted that international visitor arrivals remained below pre-pandemic levels, limiting the contribution of tourism-related activities to economic growth.
Inflation pressures also increased earlier in 2026, partly because of higher global oil prices, although those pressures eased somewhat during the middle of the year.
The two forecasts are not identical, but both institutions point to weaker-than-expected economic performance as Cambodia moves through 2026.
Government Launches $1.22 Billion Stimulus Package
Against this backdrop, Cambodia's Ministry of Economy and Finance has introduced a $1.22 billion stimulus package aimed at cushioning households and businesses from multiple economic pressures.
The programme was announced earlier this month by Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth.
The package combines government budget resources, tax measures and support from development partners.
Its measures include both short-term assistance and longer-term initiatives designed to support employment, household incomes and business activity.
Fuel Tax Cuts and Cash Support
Among the temporary measures are fuel-tax reductions through November, intended to reduce the impact of higher energy costs.
The package also includes cash transfers for poor households and tuk-tuk drivers.
These measures are designed to provide direct support to groups facing higher living costs and reduced income opportunities.
The government has said the measures come at a cost to public revenue, with the programme expected to reduce state revenue by approximately $50 million per month.
Infrastructure Projects Could Create More Than 220,000 Jobs
The stimulus package also includes local infrastructure projects expected to create more than 220,000 jobs.
Employment support is particularly important as Cambodia deals with weaker conditions in some export-oriented sectors and changing labour-market conditions.
Longer-term measures include:
Vocational training
Job matching for returning migrant workers
Youth employment support
Startup assistance
Support for small enterprises
The objective is not limited to short-term consumption support but also includes measures intended to strengthen employment and productive capacity.
Government Adds Clean-Energy Incentives
The stimulus programme also contains incentives related to clean energy.
These include tax reductions for electric vehicles and plans to convert 60,000 tuk-tuks in Phnom Penh to electric models.
The measures link economic support with Cambodia's broader efforts to improve energy efficiency and reduce exposure to external energy-price shocks.
For the transport sector, the shift toward electric tuk-tuks could also create demand for charging infrastructure, maintenance services and other parts of the emerging electric-mobility ecosystem.
Manufacturing and Investment Remain Key Strengths
Despite the weaker overall outlook, both the IMF and ADB highlighted areas of resilience in Cambodia's economy.
Manufacturing exports and foreign direct investment have continued to provide important support.
The government has also been seeking to diversify Cambodia's industrial base beyond traditional garment manufacturing and attract investment into other sectors.
The IMF said reforms aimed at attracting higher-quality foreign investment, strengthening supplier linkages, upgrading workforce skills and improving governance will be important for future resilience.
This places greater emphasis on the quality and domestic economic impact of investment rather than investment volume alone.
Real Estate Remains a Major Vulnerability
The prolonged correction in Cambodia's real estate sector remains another important concern in the IMF's assessment.
A weaker property market can affect construction, real estate-related businesses, household balance sheets and financial institutions with exposure to the sector.
The IMF therefore called for tighter oversight of banks exposed to real estate and decisive balance-sheet repair.
The recommendation reflects concerns that financial-sector weaknesses could amplify economic pressures if property-sector problems deepen.
Energy Security and Economic Resilience
Higher energy costs have become an important pressure point for Cambodia's economy.
Energy prices can affect transportation, manufacturing, logistics, household consumption and business operating costs.
The government's clean-energy measures therefore have a dual policy dimension: providing immediate economic support while also reducing longer-term exposure to energy-price volatility.
Investment in energy security and climate resilience has become part of the government's broader economic diversification agenda.
Angkor Times Analysis
The IMF's 3.0 per cent growth projection for 2026 places Cambodia's current economic slowdown in sharper perspective.
The important point is that the weaker outlook is not being attributed to one isolated problem.
Tourism remains under pressure, exports in some sectors are slowing, domestic demand is subdued, financial conditions are tighter and the real estate correction continues.
At the same time, manufacturing exports and foreign investment remain sources of resilience.
The government's $1.22 billion stimulus programme represents a substantial policy response, but its different measures serve different purposes.
Fuel-tax relief and cash transfers are designed to address immediate household and business pressures. Infrastructure spending and employment programmes are intended to support activity and jobs. Vocational training, startup assistance and SME support address longer-term productive capacity.
The clean-energy measures add another dimension by linking economic support with energy transition.
The key economic policy challenge is therefore balancing short-term protection with long-term adjustment.
Broad support can cushion households and businesses during a difficult period, but the IMF's recommendation to target assistance toward vulnerable groups reflects the need to manage fiscal resources carefully.
For Cambodia's private sector, the longer-term issues may be even more important: improving productivity, strengthening domestic supply chains, developing skilled workers, attracting higher-value investment and expanding beyond sectors vulnerable to external shocks.
The IMF's assessment also underscores the importance of financial-sector resilience.
With real estate remaining under pressure, stronger oversight and balance-sheet repair could become increasingly important for maintaining confidence in the wider economy.
Cambodia enters the remainder of 2026, therefore, with two parallel realities: a significantly weaker near-term growth outlook and an economy that still has important manufacturing and investment strengths.
How effectively policy measures address immediate pressures while advancing structural reforms will shape the country's economic performance beyond 2026.
What Is Driving Cambodia's Weaker 2026 Outlook?
The source identifies several major pressures:
Tourism: Weaker international visitor activity is reducing the contribution of tourism and related services.
Energy costs: Higher energy prices are increasing costs for households and businesses.
Garment exports: Slower export growth is affecting one of Cambodia's traditional manufacturing engines.
Remittances: Weaker remittance flows are reducing support for household incomes.
Domestic demand: Consumption and domestic economic activity remain subdued.
Real estate: The prolonged property-sector correction remains a source of economic and financial pressure.
Financial conditions: Tighter financial conditions are making financing more challenging.
External risks: Energy and trade disruptions could create additional pressure.
Frequently Asked Questions
What is the IMF's latest growth forecast for Cambodia in 2026?
The IMF has projected 3.0 per cent growth for Cambodia in 2026, according to the source.
Why did the IMF lower Cambodia's growth forecast?
The IMF cited higher energy costs, weaker tourism and remittances, slowing garment exports, subdued domestic demand and tighter financial conditions.
What is Cambodia's inflation forecast for 2026?
The IMF expects inflation to remain elevated at approximately 5.6 per cent in 2026 before easing in 2027.
How large is Cambodia's new stimulus package?
The government has announced a $1.22 billion stimulus programme combining budget resources, tax measures and partner support.
What does the stimulus package include?
Measures include temporary fuel-tax relief, cash transfers for vulnerable households and tuk-tuk drivers, infrastructure projects, vocational training, job matching, startup support and assistance for small enterprises.
How many jobs could infrastructure projects create?
The government programme includes local infrastructure projects expected to create more than 220,000 jobs.
How does the package support electric mobility?
The programme includes clean-energy incentives, including tax reductions for electric vehicles and plans to convert 60,000 Phnom Penh tuk-tuks to electric models.
What did the ADB forecast for Cambodia in 2026?
The ADB's latest projection cited in the source is 3.9 per cent, down from its earlier 4.1 per cent forecast.
What sectors continue to support Cambodia's economy?
The IMF and ADB highlighted manufacturing exports and foreign investment as important sources of resilience.