The central bank governor has set a six per cent target for Cambodia’s economic growth in 2023 – higher than the 5.2-5.8 per cent forecast by major international institutions such as the Asian Development Bank (ADB), World Bank (WB) and International Monetary Fund (IMF).
Regardless, observers have said that publicly setting the bar higher than expected – albeit still at a feasible level – could induce a self-fulfilling prophecy, enabling and getting crucial sectors of the economy to fire on all cylinders.
The National Bank of Cambodia (NBC) previously put the 2022 growth rate at 5.1 per cent, and its governor Chea Chanto claims that the levels of peace as well as political and macroeconomic stability in the Kingdom could steer the economy towards accelerated progress and achieve the six-per-cent target.
At present, the global economy faces fallout from the Russo-Ukrainian conflict, tightening financial conditions, and Covid-19-linked uncertainty, he noted in the 2022 Annual Supervision Report.
The IMF had forecast 2022 economic growth rates as follows: the world (3.2%), developed economies (2.4%), developing economies (3.7%) and Singapore, Malaysia, Vietnam, Indonesia and the Philippines collectively as “ASEAN-5” (5.2%).
Chanto affirmed that the NBC will continue to work to maintain financial stability as well as sustainable and inclusive economic growth, with risk-based inspections (RBI) of financial institutions remaining a “top focus”.
The central bank will further adopt and implement prudential macroeconomic policies to develop the banking system as well as strengthen stability and adaptability, so as to mitigate and manage systemic risks and their effects on the economy, he said.
Ky Sereyvath, Royal Academy of Cambodia (RAC) economics researcher and director of the RAC’s Institute of China Studies, sees the high-growth forecast as a motivator of action to stimulate the economy.
“When [the government] doesn’t set targets very high, policy cannot push towards their goals … the implementation of this policy is a reflection of the government’s efforts to boost the economy in 2023,” he said.
Sereyvath claimed that Cambodia’s economic relations with certain foreign partners have seen some negative signs as of late, but added that domestic consumption and spending has been on an upturn, creating the need for additional linkages.
“The local economy is booming because of the contentment, optimism and peace in the country, encouraging the people to spend. The consumer’s expenses become income for the seller, which the seller then spends on other merchandise,” he said.
“This is an economic stimulus through increased spending – a boost to the economy at a time when the world is in crisis.”