Cambodia’s economy is encountering significant hurdles, even as it attracted over $5 billion in foreign direct investment in 2025, according to a recent World Bank report. While this influx of capital has helped stabilize the economic landscape and facilitated the creation of approximately 400,000 jobs, several factors are exerting pressure on growth. Escalating fuel prices, rising inflation, and a slowdown in the construction sector are key challenges threatening economic stability.
Inflation surged to nearly 6 percent in April, significantly increasing the cost of essential goods and disproportionately impacting low-income households. The World Bank report cautioned that a 10 percent rise in fuel prices could exacerbate poverty levels, while the ongoing sluggishness in the housing and construction sectors continues to be a drag on the economy.
Economic growth forecasts for Cambodia show a GDP increase of 3.9 percent in 2026, with expectations of a recovery to 4.9 percent in 2027. The slowdown is partly attributed to the return of around 500,000 Cambodian migrant workers from Thailand, which has reduced the flow of remittances that many households rely on for support.
To combat these economic challenges, the World Bank has recommended a series of measures aimed at protecting livelihoods and creating jobs. These include accelerating structural reforms, enhancing governance, and boosting productivity. The report also suggests reducing fuel taxes, ensuring timely fertilizer imports for farmers, and increasing domestic revenue to strengthen spending on critical sectors such as healthcare, education, and social services.
Maintaining household incomes and supporting citizens in meeting daily living costs should remain a top priority for policymakers, the report emphasized. By implementing these strategies, Cambodia could better shield its economy from the pressures of rising costs and sectoral slowdowns, fostering a more resilient future.