Alarm Bells Ringing in Phnom Penh: EuroCham Survey Signals Sharp Downturn for European Businesses

In Phnom Penh, alarm sirens are blaring in the offices of European entrepreneurs. EuroCham Cambodia's semestral "Business Pulse" survey, released for the first half of 2025 (H1 2025), paints a grim picture of a business climate in sharp decline.

Revenues dropping, outlooks darkened by geopolitical tensions and a degraded perception of the economic environment: out of 150 member companies surveyed, mostly SMEs active in agribusiness (20.7%), finance (16.7%), real estate (18.7%), and consumer goods, optimism is crumbling. Despite national growth around 6%, these key players—who carry significant weight in exports, investment, and infrastructure—express palpable fatigue in the face of a kingdom in full transformation.​

Revenues in Freefall, Sectors Under Strain

Overall sales performance collapses to -7.8 points on the diffusion index (versus -12 in H2 2024), marking a slowdown after a relative improvement. Financial services stand out with a spectacular rebound to +8.3, driven by post-pandemic recovery and sustained credit demand. In contrast, real estate and construction plummet to -28.6, weighed down by frozen projects, slack demand for offices and industrial spaces, and prohibitive financing costs. Tourism and hospitality (-22), agribusiness (+1.9), and consumer goods (+4.3) show mixed trajectories, while other services (consulting, legal, accounting) slide to -11.​

Forecasts for the second half (H2 2025) turn pessimistic: -3 points overall, with tourism collapsing to -24, followed by services (-0.5) and real estate (-11). Agribusiness (+16) remains the sole bright spot, boosted by state rice projects and export resilience. This sectoral divergence reflects the vulnerabilities of a Cambodian economy still dependent on foreign flows and raw materials.​

Sector	H1 2025 Performance	H2 2025 Forecast	Optimism Change H2 2025
Agribusiness	+1.9	+16.0	+43.0
Finance	+8.3	+6.5	-11.5
Real Estate	-28.6	-11.0	-12.5
Tourism	-22.0	-24.0	0.0
Consumer Goods	+4.3	0.0	+8.0
Other Services	-11.0	-0.5	+7.0

Business Environment: Widespread Hardening

77% of respondents view the business environment as more difficult (-19 on the index), especially in agribusiness (-30) and tourism (-26.5). Government reforms, praised in hospitality (+21 points of positive impact), lose visibility elsewhere: +5.5 in finance, but only +4 in agribusiness. A third of companies (33%) anticipate drastic budget cuts: 51% via staff reductions, 45% in marketing, 26% in training. Expansion plans stagnate: only agribusiness (+16) considers growth, versus -28 in real estate and -11 overall.​

Currency remains a marker of dependency: the US dollar dominates at 86.6% of transactions (slight drop from 90%), trailed by a collapsed Khmer riel at 31.2% (versus 57%) and a marginalized euro at 23.4%. The Net Promoter Score (NPS) inches up timidly to 6.9/10 but stays in the "passive" zone: fewer than 20% enthusiastic promoters, 40% detractors ready to explore other markets. "Fragile resilience in an unstable context," sums up Zandre Van Straten, services coordinator at EuroCham.​

Thai Border and US Tariffs: Major Exogenous Shocks

Geopolitical tensions explode: 29% of companies cite them as the main brake (versus 14% in H1 2024), ahead of regulatory factors (28%) and economic ones (29%). The Cambodia-Thailand border situation hits hard: 38.7% report broken supply chains, 38% canceled orders, 31.3% delivery delays.

Nearly a quarter (24%) see no impact, but boycotts and logistics cost hikes undermine competitiveness.​

US tariff announcements, amid tense Sino-US relations, affect 53.3% of firms: 28.7% planning uncertainty, 26.7% deferred investments, 23.3% price pressures. 46.7% escape direct effects, but loss of US clients and export drops weigh on consumer goods and agribusiness. These external shocks, amplified by rising AI (in services) and local insolvency (finance), explain the sectoral pessimism.​

Key Impact	% Companies Affected (H1 2025)	Main Details
Thai Border	76%	Broken supply chains (38.7%), canceled orders (38%)
US Tariffs	53.3%	Uncertainty (28.7%), frozen investments (26.7%)
Global Geopolitics	29%	U.S. tariffs, border, maritime freight

Outlook: Resilience or Retreat?

Agribusiness emerges as the spearhead, the only sector maintaining steady expansion plans over 1.5 years, thanks to state support and export diversification. Finance holds firm, but real estate—a pillar of European FDI (10% of total)—risks collapse if projects don't restart. Tourism, despite early 2025 visitor influx, suffers from canceled conferences and logistics costs.​

EuroCham calls for targeted measures: border stability, tax incentives, regulatory simplification, and monetary stability promotion. Without them, the "Cambodian miracle"—record exports, stable European FDI—could falter. European companies, pivots of inclusive growth, demand a predictable framework to turn these warning signals into lasting opportunities. In this kingdom under strain, the stakes are clear: shift from defensive resilience to shared offense.