PHNOM PENH — The International Monetary Fund (IMF) has downgraded Cambodia's economic growth projection to 4. 8 percent in 2025, citing uneven economic recovery and rising border tension. Prudent fiscal policies and targeted reforms are needed to stabilize growth and address systemic vulnerabilities, the IMF stated.

In its Article IV Consultation released on Nov. 25, the IMF warned that growth could slow further to 4.0 percent in 2026. Inflation is projected to rise modestly this year before stabilizing in 2026.

According to the IMF executive directors, export volatility, falling remittances, a slowdown in tourism, and weak domestic demand have all contributed to the downward revision.

In the first half of 2025, growth reached 6.0 percent due to strong garment and agricultural exports plus the continued recovery of tourism, later rising to 6.2 percent. However, external and internal shocks emerged in the second half, placing pressure on the outlook.

These shocks include trade disruptions, border tensions, anemic credit growth that has exposed underlying vulnerabilities, and signs of a broader economic slowdown. Losses in remittances and weakening domestic demand have also weighed on the economy.

The IMF noted that risks remain tilted to the downside, even though deeper regional trade and investment integration continue to present opportunities. Financial sector vulnerabilities remain central to the overall risk profile.

Tariff impacts are expected to reduce export revenues as manufacturers face margin pressures. Continued trade-policy uncertainty may further hinder export performance. Border tensions could also weaken domestic demand, tourism and financial sector stability, which is already affected by elevated private debt, rising non-performing loans, and governance weaknesses.

At the same time, the IMF highlighted that greater regional integration could support export growth. The successful reintegration of returning migrant workers into the domestic labor market would also provide economic support, the IMF added.