Cambodia’s economy to accelerate in 2022 and 2023
Tuesday, 19/04/2022 15:40 (GMT+7)
(CPV) - Cambodia’s economy is forecast to grow 5.3% in 2022 and 6.5% in 2023, thanks to strong merchandise exports and foreign direct investment inflows, according to an Asian Development Bank (ADB) report released on early April.
Cambodia's economy to accelerate in 2022 and 2023, with strong merchandise export and foreign direct investment inflow. (Source: ADB)
“Cambodia’s growth rebounded to an estimated 3.0% in 2021 after a contraction of 3.1% in 2020. The government has implemented policies to mitigate the negative impact of COVID-19 on businesses and people’s incomes and to support economic recovery. Widespread vaccination against COVID-19 has enabled the country to reopen its borders for trade and tourism, leading to positive economic prospects for this year and 2023,” said ADB Acting Country Director Anthony Gill.
According to the Asian Development Outlook (ADO) 2022, industry output is expected to grow by 8.1% in 2022 and 9.1% in 2023. This growth will also be buoyed by the implementation of the Garments, Footwear, and Travel Goods Development Strategy to raise competitiveness in this segment.
Goods and services exports are forecast to grow in 2022 and 2023 on strong external demand for Cambodian products supported by a recovery in tourism services. The services sector is projected to rebound to 4.8% this year, rising to 6.8% in 2023. Reopening the economy and the high level of vaccination coverage will allow for a gradual recovery in tourism, which, in turn, will support demand for accommodation, food, transportation, and other in-person services.
The report calls on Cambodia to diversify its economy to boost sustainable growth. “Increasing trade and tourism alone will not be enough to help Cambodia sustain high economic growth,” Mr. Anthony Gill said. “Cambodia, which has traditionally focused on producing and exporting garments, travel goods, and footwear, can benefit from diversification into light manufacturing such as bicycles, electronic components, and wiring products. The diversification will make the economy more resilient to external demand shocks.”
Currently, ADB is implementing USD2.3 billion of investment projects in Cambodia. In 2021, ADB committed USD327.1 million in sovereign loans and grants and catalyzed an additional USD5 million through cofinancing for Cambodia. ADB’s lending pipeline for 2022–2025 includes USD1.44 billion of concessional lending and USD37 million in grants to support the country’s economic development and recovery from the COVID-19 pandemic./.