The ASEAN+3 Macroeconomic Research Office (AMRO) has revised its economic forecast for the ASEAN+3 region, expecting a growth of 4.3 per cent this year. This is a decline from the July prediction of 4.6 per cent, largely attributed to China’s subdued growth in Q2. Cambodia’s projection stands notably higher at 5.9 per cent.
The update was given at the October 4 quarterly ASEAN+3 Regional Economic Outlook (AREO) press conference. Despite a less optimistic global economic outlook for the coming year, the growth of the region – the 10 ASEAN member states plus China, Japan and South Korea – is expected to be buoyed by a resurgence in manufacturing exports and a revival in China’s economic momentum.
AMRO anticipates the region to grow by 4.5 per cent in 2024, due to the expected effects of China’s policies to bolster domestic demand, a steady rise in durable goods consumption in the US and the predicted recovery of the global technology cycle, which should enhance regional exports amidst the global economic softness.
Cambodia’s economic growth for 2023 is projected at 5.9%, trailing only Vietnam at 6.8% and the Philippines at 6.2%. The forecast for 2024 suggests a further acceleration with Cambodia at 6.7%, Vietnam at 7.1%, and the Philippines at 6.5%. Cambodia’s inflation rate is estimated at 3.3% for 2023 and 3.1% for 2024.
“Despite the gloomy headlines surrounding China’s economic performance, we must view things in perspective,” AMRO chief economist Hoe Ee Khor said. “Beyond the real estate sector, manufacturing investment remains robust and consumer spending is beginning to rebound – these should positively impact the rest of ASEAN+3.”
AMRO has cautioned against disregarding the potential recession risks in the US and EU, particularly in a setting where global interest rates might persistently remain high.
The World Bank’s East Asia and Pacific Economic Update, released on October 3, forecasts Cambodia’s economy to grow by 5.5 per cent in 2023 and 6.1 per cent in 2024.
Aaditya Mattoo, chief economist of the World Bank’s East Asia Pacific Region, highlighted the benefits of the Regional Comprehensive Economic Partnership (RCEP) in a video press conference. He suggested that by offering more predictable market access and prompting policy reforms in Cambodia, the agreement could stimulate new trade and investment flows.
“Cambodia is beginning to diversify into the electronics sector. However, the country must enhance its foundational attributes, especially skills and connectivity,” he said.
He further noted the potential of global growth to positively influence the country’s prospects in 2024 and acknowledged the recent investment law as a significant development that could attract more foreign direct investments.