World Bank Cuts Cambodia's 2026 Growth Forecast To 3.5 Pct Amid Tourism Slump, High Fuel Costs

PHNOM PENH, Oct 6 (Bernama-Xinhua) -- The World Bank on Tuesday downgraded Cambodia's 2026 economic growth forecast to 3.5 per cent, down from 5.3 per cent last year, citing a sharp slump in international tourist arrivals and surging fuel costs, reported Xinhua.

"In Cambodia, domestic demand weakened in 2026 as international arrivals and remittances fell, while higher oil prices squeezed household incomes," the bank said in its latest East Asia and Pacific Economic Update.

The report noted that while a real estate correction and tighter credit conditions weighed heavily on investment, overall growth was partially cushioned by rising goods exports.    The severe impact of energy costs is clearly reflected at local pumps. According to the Ministry of Commerce, the retail price of regular gasoline has risen to 5,150 riels (about US$1.27) per litre on Tuesday, representing a 33.7 per cent increase compared to levels before the West Asia conflict. Meanwhile, diesel prices have climbed to 5,650 riels (about US$1.39) per litre, marking a 46.7 per cent spike.

Over the medium term, Cambodia's economic growth is projected to rebound to 4 per cent in 2027 and 5 per cent in 2028, the report said.

This recovery is expected to be driven by stabilising energy prices, a revival in tourism, and the successful economic reintegration of returning migrant workers. However, the report cautioned that the El Nino weather phenomenon could temper the anticipated agricultural recovery in 2027.

The Southeast Asian nation's economy remains heavily reliant on tourism, agriculture, real estate, construction, and the export of garments, textiles, footwear, and travel goods.

According to government data, exports of garments, textiles, footwear, and travel products rose 7.2 per cent year-on-year to US$11.76 billion during the first eight months of 2026. Conversely, international tourist arrivals plunged 44 per cent to 2.25 million over the same period, severely impacted by online scam issues, friction along the Cambodia-Thailand border, and ongoing geopolitical conflicts in West Asia.

--BERNAMA-XINHUA