Logo of Phnom Penh Post newspaper Phnom Penh Post - ADB sets GDP growth at 5.3%

ADB sets GDP growth at 5.3%

Content image - Phnom Penh Post
High-rise buildings in Phnom Penh. Heng Chivoan

ADB sets GDP growth at 5.3%

Gains in exports and increased foreign direct investment (FDI) are expected to drive gross domestic product (GDP) growth by 5.3 per cent this year and expand to 6.5 per cent in 2023, based on Asian Development Bank’s (ADB) latest prediction.

According to its 2022 Asian Development Outlook, industrial production will rise 8.1 per cent year-on-year in 2022 and 9.1 per cent next year, while the services sector will improve, coming in at 4.8 per cent in 2022 and 6.8 per cent in 2023.

The implementation of the strategy to develop Cambodia’s garment, footwear and travel goods sector will underpin growth as well as increase its competitive edge.

Goods and services exports are projected to grow in these two years, thanks to rising external demand for Cambodian products and the gradual recovery of the tourism sector.

“The reopening of the economy and the widespread vaccination against Covid-19 will lead to a gradual recovery of the tourism sector, which will support the demand for accommodation, food, transportation and other direct services,” the report read.

It, however, called for the diversification of the economy to ensure sustainable growth.

Speaking at the launch of the Asia-Pacific Development Outlook 2022 (ADO 2022) on April 6, Anthony Gill, ADB acting country director reiterated that Cambodia’s GDP growth for 2021 recovered to three per cent after contracting 3.1 per cent in 2020.

“The government has implemented policies to reduce the negative impact of Covid-19 on businesses and people’s incomes and support economic restoration. Extensive vaccination allowed Cambodia to reopen its borders for trade and tourism, leading to positive growth prospects for this year and 2023,” he said.

But, increasing trade and tourism alone would not be enough to help Cambodia sustain high economic growth.

“Cambodia, which focused on manufacturing and exporting garments, travel goods and footwear, could benefit from the diversification of light industries such as bicycles, spare parts, electronics and wiring products. This diversification will make the economy more resilient to crises of foreign demand,” he advised.

ADB is in the process of implementing an investment project worth $2.3 billion. The bank’s budget which will be allocated between 2022 and 2025 includes $1.44 billion in concessional loans and $37 million in grants to support economic development and recovery from the pandemic.

Meanwhile, Royal Academy of Cambodia economic researcher Ky Sereyvath forecasts that Cambodia’s economy might “grow slower” than ADB’s projection of 5.3 per cent this year.

His estimate puts GDP growth at around three per cent, based on current data and economic conditions, although they are subject to change.

He understood that ADB’s remarks were in relation to the increase in Cambodia’s exports in the garment sector and the implementation of free trade agreements (FTA) with China and South Korea on agricultural exports such as Pailin longan and mango.

“Japan also imports many products from Cambodia. Some domestic sectors will also grow, such as the retail sector,” he told The Post.

However, Sereyvath viewed that there are “still some sectors that continue to suffer” and face persistent challenges that are “difficult to recover from”, including the real estate sector and tourism.

“In particular, international tourism as other countries have not recovered yet from the Covid-19 crisis,” he said.

MOST VIEWED

  • Ministry orders all schools, public and private, to close for SEA Games

    From April 20 to May 18, all public and private educational institutions will be closed to maintain order and support Cambodia's hosting of the 32nd SEA Games and 12th ASEAN Para Games, said a directive from the Ministry of Education, Youth and Sport. Cambodia will host the

  • Newest horror film showcases unique Khmer culture, identity

    At first glance, the trailer to new horror sensation The Ritual: Black Nun looks like a western-produced feature film. As the story reveals itself to the viewers, it becomes clearer that this is a Khmer film, with a strong Cambodian identity and close links to

  • Almost 9K tourists see equinox sunrise at Angkor Wat

    Nearly 9,000 visitors – including 2,226 international tourists – gathered at Angkor Wat on March 21 to view the spring equinox sunrise, according to a senior official of the Siem Reap provinical tourism department. Ngov Seng Kak, director of the department, said a total of 8,726 people visited Angkor Wat to

  • Angkor Beer strengthens national pride with golden new look and fresher taste

    Angkor Beer – the "Gold of Angkor" – has a new look, one that is more stylish and carries a premium appeal, as well as a fresher taste and smoother flavour, making it the perfect choice for any gathering. Angkor Beer recently launched its new design, one

  • Water supply authority assures public shortages over early ‘24

    The Phnom Penh Water Supply Authority (PPWSA) asked for understanding from Phnom Penh residents in some communes where water pressure is weak. They assured residents that all supply issues will be resolved by early 2024, but have suggested that residents use water sparingly in the meantime.

  • Khmer ballet documentary debuts April 1

    A new documentary, The Perfect Motion, or Tep Hattha in Khmer, will premiere to the public on April 1. The documentary film follows two intertwined storylines: the creation of a show called Metamorphosis by the late Princess Norodom Buppha Devi (her very last production) and the