Cambodia is one of the fastest growing economies: the country's real GDP grew by an average of 8% annually in the pre-pandemic period, which allowed the kingdom to significantly improve the well-being of the population. The COVID-19 pandemic led Cambodia to its first recession in decades in 2020 and a slowdown in economic growth in 2021-2023. Being export-oriented, the country is extremely dependent on external factors, and therefore the global economic slowdown that followed the pandemic proved to be a serious obstacle to maintaining the previous positive production dynamics.
By the end of 2024, the kingdom's real GDP increased by 6.0%, primarily due to a significant tourist flow, increased exports and increased domestic demand. At the same time, there is still plenty of room for growth in the local service sector, as its contribution to national GDP is still below the level of 2019. In particular, revenues from ticket sales to the main temple and symbol of the country, Angkor Wat, amounted to slightly more than half of the pre-pandemic ones by the end of the year (in general, tourism revenues in 2024 amounted to 74% of the 2019 level). In addition, in 2024, Cambodia recorded a decrease in lending due to the ongoing crisis in the real estate sector. The labor market situation also remains tense: while the number of jobs in industry is increasing amid rising exports, the pace of hiring in other industries has noticeably decreased since the pandemic.
In the medium term, the kingdom's economic situation will largely depend on global market conditions, primarily on the situation in the United States, the largest buyer of Cambodian goods, which accounts for more than a third of the kingdom's total exports. Cambodia's real GDP growth is expected to reach a moderate 4.0% in 2025 and slow to 3.4% in 2026.
Inflationary pressure in Cambodia has been steadily decreasing in recent years after a local peak of 5.3% in 2022, caused by global price increases in most countries of the world. The inflation rate in the kingdom was 2.1% in 2023 and decreased to 0.9% in 2024. At the same time, in the medium term, a gradual increase in the rate of price growth is expected in the country due to an increase in consumer demand.
