Phnom Penh: The World Bank has projected that Cambodia’s economy will grow by 4.0 percent this year and 4.5 percent next year, adjusting its earlier forecasts from January due to escalating international trade tensions and policy uncertainty.
According to Agence Kampuchea Presse, the Global Economic Prospects report, released in Washington, highlights that international trade issues have led the bank to revise its forecasts for nearly 70 percent of economies worldwide, spanning all regions and income levels. For Cambodia, the revised 2025 forecast is 1.5 percentage points lower than the January projection, with next year’s forecast reduced by 1.0 point.
M. Ayhan Kose, the bank’s deputy chief economist, emphasized the importance of integrating with new trade partners and implementing pro-growth reforms to withstand the global trade conflict. The bank advocates for renewed global dialogue and cooperation to navigate the challenges posed by rising trade barriers and mounting uncertainty.
In the broader ASEAN region, the report forecasts varying growth rates, with Vietnam and the Philippines expected to grow by 5.8 percent and 5.3 percent, respectively, both down by 0.8 points from January. Indonesia, Malaysia, Laos, and Thailand also see downward revisions, while Myanmar’s economy is predicted to contract by 2.5 percent.
The World Bank noted that increased trade policy uncertainty and reduced confidence, alongside softer external demand from major economies and China, are likely to affect exports and private investment in regions significantly exposed to global trade, such as Cambodia, Thailand, and Vietnam.
Despite some economies benefiting from fiscal policy support, the bank warns of the unpredictable macroeconomic impacts of higher trade barriers that could dampen growth. Risks to the regional outlook have intensified since January, including potential reversals to higher trade barriers and continued policy uncertainty.
Conversely, positive outcomes may arise from larger fiscal expansions in China or other major economies and productivity improvements from technological adoption. The bank suggests that resolving current trade disputes could enhance global growth by 0.2 percentage points on average over 2025 and 2026.
The World Bank urges developing economies to pursue broader liberalization, strategic trade partnerships, and trade diversification through regional agreements. Policymakers are advised to focus on domestic revenue mobilization, prioritize fiscal spending for vulnerable populations, and improve fiscal frameworks to foster economic growth and efficient labor markets.