Cambodia’s economy continued to recover in 2023, but at a slightly weaker pace of 5.0 percent. The recovery was backed by the services sector, especially a recovery in tourism, as well as the non-garment manufacturing sector, notably exports on solar panels, vehicle parts, and electrical parts. Garment exports and the real estate sector remained weak.

A rebound in the garment sector due to stronger demand in major advanced markets, and a robust tourism recovery will fuel Cambodia’s economic growth in 2024 and 2025. The non-garment manufacturing sector is expected to sustain its strong growth momentum, supported by stable foreign direct investment (FDI) inflows.

Consumer price index (CPI) inflation declined rapidly from its peak in 2022, averaging 2.1 percent in 2023, before turning to a modest deflation at the beginning of 2024. The volatility of CPI inflation is primarily driven by fluctuations in food and oil prices, which are prone to global trends. Gradually approaching pre-pandemic levels, CPI inflation is expected to rise to 2.2 percent in 2024 and 2.3 percent in 2025 due to higher domestic demand and a possible rebound in energy prices.