Cambodia’s Economic Growth Steady in 2024, Driven by Trade and Tourism Recovery, World Bank Report Says

The report highlights that Cambodia’s growth in 2024 is largely supported by a surge in manufacturing exports and continued foreign investment.

Economic activity in Cambodia has remained stable in 2024, with a projected growth rate of 5.3%, slightly up from 5.0% in 2023, according to the World Bank’s latest Cambodia Economic Update: From Recovery to Resilience: Harnessing Tourism and Trade as Drivers of Growth. The country’s economic performance has been primarily driven by external demand, with a significant rebound in exports, especially in manufacturing, and a partial recovery in tourism. However, challenges persist across various sectors, revealing the need for further economic diversification and productivity improvements.

The report highlights that Cambodia’s growth in 2024 is largely supported by a surge in manufacturing exports and continued foreign investment. The country has successfully regained its pre-COVID-19 levels of international tourist arrivals, though tourist spending remains subdued due to a decline in visitors from high-spending nations. Despite these challenges, the recovery in the export and tourism sectors has been critical in maintaining economic stability.

“Cambodia can further boost its growth by diversifying trade and improving productivity,” said Tania Meyer, World Bank Country Manager for Cambodia. “Investing in human capital, especially in education, and advancing reforms to improve the business environment will be essential for enabling the private sector to create more and better jobs.”

Challenges in Domestic Consumption and Fiscal Management

While international demand has driven growth, domestic consumption remains muted due to subdued credit growth and high levels of household debt. These factors underscore the need for ongoing fiscal reforms. Strengthening domestic revenue mobilization and improving fiscal management are vital to supporting social spending and public investment.

The World Bank stresses that Cambodia must diversify its exports, focusing on both goods—particularly manufactured and processed agricultural products—and services, especially in sectors like travel and hospitality. This diversification would help reduce the country’s vulnerability to external shocks and ensure more stable long-term growth.

Focus on Productivity and Structural Transformation

A special section of the report focuses on how Cambodia can enhance productivity to sustain its economic growth and realize its ambition of becoming a high-income country by 2050. Key recommendations for achieving this include accelerating structural transformation, promoting modernization and digitalization, and addressing critical challenges in the business environment, such as regulatory barriers, infrastructure deficits, and skills mismatches in the labor market.

These efforts, alongside continued reforms and investments in education, will be essential for Cambodia to move up the value chain, create higher-paying jobs, and improve overall economic resilience.

Path Toward Sustainable Growth and High-Income Status

The World Bank’s report concludes that while Cambodia is on a positive trajectory, achieving long-term stability and prosperity will require significant investment in human capital, infrastructure, and the business environment. By focusing on productivity growth, export diversification, and fiscal reforms, Cambodia can navigate external shocks more effectively and position itself as a high-income nation by mid-century.