Cambodia Investment Review
The Executive Board of the International Monetary Fund (IMF) has concluded its Article IV consultation with Cambodia, delivering an in-depth assessment of the Kingdom’s economic performance and challenges. The review underscores a steady economic recovery, robust export growth, and persistent headwinds in the construction and real estate sectors.
Economic Growth and Outlook
Cambodia’s economy continues to recover, with real GDP projected to grow from 5.5% in 2024 to 5.8% in 2025. Inflation is forecast to rise from 0.5% in 2024 to 2% in 2025 while remaining contained. However, risks to this outlook are tilted to the downside, driven by external factors such as policy changes from major trading partners and geoeconomic fragmentation, as well as domestic vulnerabilities like the ongoing weakness in construction and real estate.
The recovery is uneven, fueled primarily by external demand. Garment and agricultural exports have rebounded strongly, while the tourism sector is recovering more slowly due to structural shifts in visitor composition. Non-tradable sectors, particularly construction and real estate, face significant challenges, including rising non-performing loans and signs of private-sector debt overhang.
IMF Executive Board Concludes 2024 Article IV Consultation with
Cambodia.
IMF Executive Board Concludes 2024 Article IV Consultation with
Cambodia.
Fiscal and External Balance
The IMF projects a decline in Cambodia’s fiscal deficit from 3% of GDP in 2024 to 2.4% in 2025, supported by gradual fiscal consolidation under the government’s medium-term fiscal framework. Public debt is expected to remain below 30% of GDP over the next decade, reflecting strong debt sustainability.
The current account balance is projected to move into deficit, widening from 1.8% of GDP in 2024 to 2.5% in 2025, as recovering exports and tourism are outpaced by strong import demand. The IMF emphasized the importance of fiscal prudence and high-quality public spending to maintain economic resilience.
IMF Executive Board Concludes 2024 Article IV Consultation with
Cambodia
IMF Executive Board Concludes 2024 Article IV Consultation with
Cambodia.
Key Policy Recommendations
The IMF outlined several priorities to sustain recovery, promote inclusivity, and strengthen macro-financial stability:
Persistent Challenges
Despite positive growth projections, Cambodia faces challenges including declining FDI inflows, corrections in the real estate sector, and risks to financial stability. The IMF stressed the need for coordinated efforts across government and financial institutions to address these vulnerabilities. Strengthening governance, transparency, and data capabilities were highlighted as crucial for building long-term resilience.
IMF Executive Board Concludes 2024 Article IV Consultation with
Cambodia.
Path Forward
The IMF’s consultation emphasized Cambodia’s potential to sustain growth through prudent fiscal management, structural reforms, and efforts to stabilize the financial system. As Cambodia transitions to middle-income status, diversifying its economy, strengthening institutions, and fostering economic resilience will remain essential priorities.
By addressing these challenges and leveraging its strengths, Cambodia is well-positioned to achieve sustainable and inclusive growth in the years ahead.
