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IMF Projects Cambodia's Growth to Slow to 3.0% in 2026, Urges Action on Scams and Real Estate
PHNOM PENH — Sept. 29, 2026: The International Monetary Fund has projected Cambodia's economic growth will slow to 3.0 percent in 2026, warning that risks are tilted to the downside and calling for decisive action on financial integrity and real estate vulnerabilities.
In its 2026 Article IV consultation, completed by the IMF Executive Board on Sept. 22, 2026, the Fund said growth would recover to 4.0 percent in 2027. The slowdown reflects higher energy costs, weaker tourism and remittances, slowing garment exports, subdued domestic demand and tighter financial conditions.
Cambodia's economy remained resilient in 2025, supported by robust manufacturing exports, foreign direct investment and infrastructure projects. However, growth slowed to 5.3 percent as domestic demand stayed subdued amid a prolonged real estate correction. Border tensions with Thailand reduced land-based tourism and remittances and prompted the return of nearly one million migrant workers.
Inflation rose sharply in early 2026, initially driven by higher energy prices but increasingly becoming broad-based. It is expected to remain elevated at 5.6 percent in 2026 before easing as energy prices normalise. The current account deficit is projected to widen sharply, although resilient FDI and adequate international reserves provide buffers.
The IMF identified persistent scam activities as a downside risk to growth, warning that they could further weaken exports and tourism, hamper investment and raise financial stability concerns. It called for "decisive action to strengthen financial integrity," including urgently identifying and addressing potential links between criminal activity and banks and closing significant gaps in licensing frameworks.
"Deepening understanding of how the proceeds of scam activities and human-trafficking are laundered will enable more targeted mitigation," the IMF said, adding that a regulatory framework for the virtual asset sector should be advanced and enforced once enacted.
On the financial sector, the Fund urged decisive balance-sheet repair, stronger non-performing loan resolution and tighter oversight, noting that the end of regulatory forbearance has exposed asset-quality strains amid continued real estate weakness.
Fiscal policy should cushion the near-term slowdown through targeted support while maintaining debt sustainability, the IMF said, recommending that broad fuel-related support be phased out as price pressures ease. Monetary policy should remain agile, with absorbing excess riel liquidity through market-based operations if second-order inflationary pressures broaden.
On structural reform, the IMF said the priority is to raise the productivity payoff from investment and strengthen economic resilience, through reforms that attract higher-quality FDI, deepen supplier linkages, upgrade skills and improve governance and the rule of law.
The Executive Board endorsed the staff appraisal on a lapse-of-time basis. Cambodia's public debt remains sustainable with a low risk of debt distress, and the fiscal deficit remains within the authorities' prescribed ceiling.
Source: International Monetary Fund
Reported by The Khmer Today