The World Bank has lowered its forecast for Cambodia’s economic growth in 2026 to 3.5%, citing weaker tourism, declining remittance inflows and higher energy costs as key pressures on the economy.
The revised outlook represents a significant slowdown from the 5.3% growth recorded in 2025, with weaker domestic demand and pressure on several major economic sectors weighing on activity.
The World Bank outlined the revised projection in its latest East Asia and Pacific Economic Update, released Tuesday.
Key Economic Indicators
2025 growth: 5.3%
World Bank 2026 forecast: 3.5%
IMF 2026 forecast: 3.0%
World Bank 2027 forecast: 4.0%
World Bank 2028 forecast: 5.0%
Key pressures: Tourism, remittances, energy costs, real estate and credit conditions
Key support: Stronger goods exports
Medium-term risks: Property weakness, external uncertainty and adverse weather
Tourism, Remittances and Energy Costs Weigh on Demand
According to the World Bank, Cambodia's domestic demand weakened in 2026 as international tourist arrivals and remittances declined, while higher oil prices reduced household purchasing power.
The combination has put pressure on household incomes and spending, contributing to a broader slowdown in economic activity.
The World Bank also identified weakness in the real estate sector and tighter credit conditions as significant constraints on investment.
However, stronger goods exports provided some support and helped cushion the impact of weaker domestic demand.
Cambodia's Growth Outlook
| Year | World Bank forecast |
|---|---|
| 2025 | 5.3% |
| 2026 | 3.5% |
| 2027 | 4.0% |
| 2028 | 5.0% |
The forecast suggests that the World Bank expects Cambodia's economy to begin recovering in 2027 before accelerating further in 2028.
IMF Also Sees a Sharp 2026 Slowdown
The World Bank's forecast is broadly consistent with a more cautious outlook from the International Monetary Fund (IMF).
The IMF recently projected Cambodia's economy to grow by 3.0% in 2026, compared with 5.3% in 2025.
The IMF attributed the slowdown to several overlapping pressures, including:
Higher energy prices
Weaker tourism
Lower remittance inflows
Slower garment exports
Subdued domestic demand
Tighter financial conditions
The IMF expects Cambodia's growth to improve to 4.0% in 2027.
While the two institutions differ on the precise 2026 growth rate, both point to similar pressures affecting Cambodia's economy.
World Bank Expects Recovery From 2027
Despite the downgrade, the World Bank expects Cambodia's economy to regain momentum over the medium term.
Growth is projected at 4.0% in 2027 and 5.0% in 2028.
The expected recovery is linked to several factors, including:
Stabilising energy prices: Lower or more stable energy costs could reduce pressure on households and businesses.
Tourism recovery: A revival in international tourism could strengthen consumer spending, employment and tourism-related businesses.
Returning migrant workers: The economic reintegration of Cambodian migrant workers returning home could support domestic economic activity.
These factors are expected to help offset some of the pressures that have weighed on Cambodia during 2026.
Real Estate Remains a Major Risk
The World Bank continues to identify weakness in Cambodia's property market as a significant risk to the outlook.
The prolonged real estate downturn has affected investment and is occurring alongside tighter credit conditions.
The lender also highlighted broader external economic uncertainty as another risk that could affect Cambodia's recovery.
For an economy in which construction, property and related services have played important roles, continued weakness in the sector could limit the pace of investment recovery.
Agriculture Faces Weather Risks
Agriculture represents another uncertainty for the recovery.
The World Bank warned that El Niño-related weather effects could limit the pace of agricultural recovery next year, even if other parts of the economy improve.
Adverse weather conditions could therefore create an additional challenge for rural incomes and agricultural production.
The source does not provide a specific estimate of the potential agricultural losses from these weather conditions.
Angkor Times Analysis
The World Bank's 3.5% forecast places Cambodia's 2026 slowdown in the context of several simultaneous pressures rather than a single economic shock.
Tourism and remittances affect household income and consumption, higher energy costs increase financial pressure, while weak property activity and tighter credit conditions constrain investment.
At the same time, stronger goods exports provide an important counterweight, showing that not all major economic drivers are moving in the same direction.
The more important question for 2027 and beyond is whether the temporary pressures identified by the World Bank begin to ease as expected.
The projected recovery to 4.0% in 2027 and 5.0% in 2028 depends on factors including tourism recovery, more stable energy prices and stronger domestic economic activity. Property-market weakness, external uncertainty and weather risks remain potential constraints.
The difference between the World Bank's 3.5% forecast and the IMF's 3.0% projection also underscores the uncertainty surrounding Cambodia's near-term economic outlook. Both institutions, however, currently expect growth to strengthen from 2027.
Frequently Asked Questions
What is the World Bank's latest growth forecast for Cambodia in 2026?
The World Bank forecasts 3.5% economic growth for Cambodia in 2026.
How does this compare with 2025?
Cambodia's economy grew by 5.3% in 2025, according to the report cited by Kampuchea Thmey.
Why did the World Bank lower its forecast?
The World Bank cited weaker international arrivals, declining remittances, higher oil prices, weaker domestic demand, real estate weakness and tighter credit conditions.
What does the IMF forecast for Cambodia in 2026?
The IMF projects 3.0% growth for Cambodia in 2026.
Does the World Bank expect Cambodia's economy to recover?
Yes. The World Bank forecasts growth of 4.0% in 2027 and 5.0% in 2028.
What could support Cambodia's recovery?
The World Bank points to stabilising energy prices, a recovery in tourism and the economic reintegration of returning migrant workers.
What are the major risks to the outlook?
The World Bank highlighted continued weakness in the property market, external economic uncertainty and adverse weather conditions, including potential El Niño-related effects on agriculture.