Cambodia in 2025: Economic Progress, Border Disputes, and Democratic Challenges
Economic Growth and Development
Cambodia’s economy shows promising signs with the Asian Development Bank (ADB) maintaining a 6.0% growth forecast for 2025. The growth is primarily driven by the manufacturing sector, especially garments, footwear, and travel goods. The country’s economic momentum is further supported by steady gains in agriculture and tourism, along with continued foreign direct investment.
Border Tensions with Thailand
A significant challenge emerged in 2025 when tensions escalated along the Cambodia-Thailand border. The conflict began on May 28, 2025, with a fatal incident involving a Cambodian soldier, followed by further escalation in July when a Thai soldier was injured by a landmine. The situation deteriorated into direct armed conflict, with both nations claiming self-defense.
The international community has responded to the crisis, with various nations calling for de-escalation. Canada expressed grave concern and urged dialogue, while China, through Foreign Minister Wang Yi, described the conflict as ‘heartbreaking’ and advocated for a peaceful resolution through ASEAN mediation.
Political Landscape and Governance
Under Prime Minister Hun Manet’s leadership, despite promises to strengthen democracy and rule of law, the government has faced criticism for tightening restrictions on fundamental freedoms and intensifying persecution of dissidents in 2024.
Economic Challenges and Future Outlook
Cambodia continues to face significant infrastructure challenges and requires greater connectivity and investments in both rural and urban areas. The country’s economic diversification efforts necessitate fostering entrepreneurship, expanding technology use, and developing new skills. Key reforms are essential for sustaining inclusive growth, fostering competitiveness, and improving public services.
According to the IMF, accelerating structural reforms is crucial for diversifying growth drivers and improving competitiveness. The focus remains on enhancing the business environment, strengthening governance, and investing in human capital to support sustainable and inclusive long-term growth.
