Middle East Conflict Drives Inflation and Economic Slowdown in Cambodia
Cambodia's economic growth forecast for 2026 has been significantly downgraded due to the ongoing conflict in the Middle East, according to a report by Mekong Strategic Capital. The conflict has led to increased fuel prices, which are expected to add between 1.5 and 3.2 percentage points to Cambodia's inflation rate, previously projected at around 2%. This inflationary pressure is anticipated to reduce Cambodia's GDP growth by 1.5 to 2 percentage points, potentially bringing it down to between 2% and 2.5% from an earlier expectation of around 4%. The report highlights that Cambodia's economy is experiencing a 'two-speed' dynamic, with resilient goods exports and manufacturing sectors, while tourism, real estate, and other domestic sectors remain under pressure. The escalation in the Middle East has exacerbated these challenges by causing higher oil prices, disrupted shipping routes, and increased transport costs. 
