The Cambodian garment and textile industry has reinforced its status as the nation's primary economic engine, recording a robust 17 per cent Y-o-Y increase in garment exports, which reached $10.46 billion for the January–November 2025 period. While the sector maintains double-digit growth, the narrative is shifting from pure volume to strategic resilience. Despite a seasonal normalization in November - which saw knitted apparel exports dip slightly to roughly $540 million - the broader annual trajectory remains positive. This growth is increasingly buffered by a rise in raw material imports, with knitted fabric intakes rising significantly, signaling that manufacturers are preparing for a sustained production cycle into 2026.
Diversification and tariff pressures shape the 2026 outlook
The industry is currently navigating a complex ‘two-speed’ recovery. While demand from the European Union and ASEAN remains stable, uncertainty surrounding US trade policy and potential tariff hikes has prompted a rapid diversification strategy. Cambodia is aggressively leveraging the Regional Comprehensive Economic Partnership (RCEP) and bilateral FTAs with China and South Korea to reduce its 40 per cent export dependency on the American market. Our upward trend is now supported by new investment inflows from East Asia, which are helping us move into higher value-added functional wear, notes Thong Mengdavid, a prominent regional economic analyst.
Industrial upgrading ahead of LDC graduation
A critical challenge looms as Cambodia prepares for its 2029 graduation from Least Developed Country (LDC) status. In response, the sector is intensifying its "double transformation"—integrating digital automation with green manufacturing standards. The Ministry of Commerce has reported a 15.5 per cent increase in active factories, now totaling over 1,800, many of which are adopting energy-efficient technologies to meet global ESG mandates. This proactive upgrading is designed to maintain Cambodia’s competitive edge in the global retail supply chain, ensuring the sector remains the bedrock of employment for over 900,000 workers. The Garment, Footwear, and Travel goods (GFT) sector is Cambodia's largest foreign exchange earner, contributing nearly 10 per cent to the national GDP. Dominating the mid-market knitwear and outdoor apparel categories, the industry is currently expanding into electronics and high-tech textiles to ensure long-term stability beyond its 2029 LDC graduation.
