Workers at a garment factory in Phnom Penh. The manufacturing sector has brought millions of dollars into Cambodia's economy every year. Post Staff
The industrial sector will remain the main driving force behind Cambodia’s economic growth in 2025, with an expected growth rate of 8.6%. In 2024, the sector increased by 8.5%.
According to the Budget in Brief Fiscal Year 2025, released by the Ministry of Economy and Finance this week, the Kingdom’s economy is tipped to grow by 6.3% in 2025, amidst increasing domestic and international challenges and risks, which will continue to threaten the sustainability and long-term development of Cambodia.
The industrial sector is expected to support this growth, with a forecasted increase of 8.6%, followed by the services sector at 5.6% and the agriculture sector at 1.1%.
In 2024, the Budget in Brief predicted Cambodia’s economy would grow by 6.6%, supported by the industrial sector with a growth rate of 8.5%, services at 6.9% and agriculture at 1.1%.
According to the report, the strong growth in the industrial sector is attributed to the maintained balance of the garment and non-garment manufacturing sub-sectors. The garment sub-sector is expected to maintain near pre-pandemic growth levels due to improved global demand, coupled with the implementation of the “Cambodian Garment, Footwear, and Bag Sector Development Strategy 2022-2027”.
Additionally, the non-garment manufacturing sub-sector is expected to maintain solid growth due to continued growth in external demand.
Similarly, the food and beverage manufacturing sub-sector is also predicted to continue its positive growth.
However, the construction sector is expected to continue growing at a slower pace than usual due to a slow recovery in foreign investment, particularly in tourism-related and commercial construction, while residential construction is expected to maintain lower growth than pre-pandemic trends.
The report noted that the service sector is expected to grow by 5.6% due to sustained growth in hospitality and food services, as well as tourism-related services.
As for the agriculture sector, it is expected to grow by 1.1% in 2025, driven by good prospects in the crop and livestock sub-sectors and gradual recovery in the fisheries sub-sector.
Hong Vanak, an economist at the Royal Academy of Cambodia, told The Post on January 17 that political stability, reforms to investment laws and the development of skilled human resources have helped Cambodia attract more investment, especially in the establishment of factories and manufacturing enterprises aimed at producing export goods.
He also mentioned how the government’s efforts to negotiating trade agreements with various countries have been instrumental in attracting investors to open factories.
“As more investors set up factories, exports will increase. The manufacturing sector will remain a key export commodity with great potential for Cambodia,” he added.
