The Ministry of Economy and Finance has pegged Cambodia’s 2023 economic growth at 6.6 per cent, and the gross domestic product (GDP) per capita at $1,924 for the year.
This is according to the draft Law on Financial Management for 2023, which was drawn up by the finance ministry and approved by the Council of Ministers on October 28.
The bill will now be sent to the National Assembly (NA) for a vote. If approved, the document will be forwarded to the Senate for review, after which it will be returned to the NA to proceed with a signature from the King – or acting head of state – to become law.
Using a conversion rate of 4,065 KHR per USD, the draft law estimates that GDP will hit 131.276 trillion riel in 2023, or approximately $32.291 billion, resulting in a nearly eight per cent jump in the $1,785 GDP per capita forecast for 2022, assuming a population of nearly 16.8 million for next year.
By comparison, Worldometer elaboration of the latest UN data indicates a population of nearly 17.3 million at present.
“Cambodia’s economic growth in 2023 will be underpinned by three main economic sectors: industry, services, and agriculture,” the finance ministry said.
The draft law projects the industrial sector to grow 9.2 per cent in 2023, compared to 9.0 per cent in 2022, due to strong growth in both the garments and non-garments manufacturing segments, although the construction segment could see a relatively slow recovery.
The service sector is expected to expand by 6.6 per cent in 2023, versus 4.3 per cent in 2022, propped up by continued recovery in domestic economic activity, especially in the hotel and restaurant segments and other tourism-support sectors.
Growth in the agricultural sector is anticipated to tick up to 1.1 per cent in 2023, from 0.7 per cent in 2022, on the back of strong uptrends in the crop and animal husbandry segments, with the fisheries segment also expected to stage a recovery.
Despite the largely positive outlook, the finance ministry also warns of major challenges, both internal and external, that could undermine economic growth and disrupt overall development.
However, as a safeguard, the ministry notes that the government has at its disposal “The Strategic Framework and Programmes for Economic Recovery in the Context of Living with Covid-19 in a New Normal 2021-2023”, a comprehensive roadmap to safely guide the economy as the novel coronavirus becomes endemic.
The draft law stresses that the government will keep pushing for the implementation of this roadmap “to revitalise and strengthen the potential of economic growth poles, return to sustainable and inclusive growth, seize new opportunities that emerge in line with regional and global trends, and build socio-economic resilience”.
The document notes that 2023 inflation is expected to moderate to 2.5 per cent as international oil prices return to normal trends, and that the local currency’s exchange rate against the US dollar is forecast to remain stable at around 4,065.
Cambodia Chamber of Commerce (CCC) vice-president Lim Heng also believes that economic growth will accelerate from 2022, propelled by fairly high levels of political stability, a favourable investment legal framework, improving transportation infrastructure, and a large international market for Cambodian goods.
He suggested that economic growth can be made faster and more robust through the active and effective use of bilateral free trade agreements (FTA) with China and South Korea, the Regional Comprehensive Economic Partnership (RCEP) and the Kingdom’s other trade deals, as well as preferential tariff schemes, such as the EU’s ‘Everything But Arms’ and the US’ Generalised System of Preferences.
Heng added that the list of companies behind the investment project proposals approved by the Council for the Development of Cambodia (CDC) is growing each year.
“I remain optimistic that, from 2022 onwards, the Cambodian economy will grow, driven by elevated imports and exports, owing to the positives stemming from the bilateral and multilateral FTAs signed by Cambodia that have entered into force,” he told The Post on October 30.
Heng also highlighted the ASEAN Summit as a suitable chance to attract large companies to invest in Cambodia, noting that the event is scheduled to be hosted by the Kingdom early next month and set to be attended by leaders of many countries.
The World Bank (WB) last month predicted that Cambodia’s economic growth would reach 5.2 per cent next year, “supported by recovering domestic consumption as employment rates improve along with strong government consumption during the election year and inflation recedes.
“The travel, tourism, and hospitality industries are expected to see a boost, underpinned by a revival of domestic demand and tourism,” it said in its latest Macro Poverty Outlook (MPO) published on September 26.