The World Bank (WB) has raised its 2022 growth forecast for Cambodia’s real gross domestic product (GDP) to 4.8 per cent, from 4.5 per cent in April, as a rise in the export of garment, footwear and travel goods (GTF), bicycle and agricultural items continue to underpin post-Covid-19 economic recovery.
In its latest Macro Poverty Outlook (MPO) published on September 26, the Washington-based multilateral lender noted that although Covid-19 infections have resurged in the Kingdom, chiefly due to the Omicron variant, no deaths linked to the disease have been officially recorded since April 19, underscoring the success of the vaccine roll-out.
“By end-August 2022, about 86 per cent of the population had received two doses of [a] coronavirus vaccine. After adopting a strategy of ‘living with Covid-19” in late [2021], the economy has gradually recovered, driven by domestic economic activity and merchandise exports.
“However, as an importer of energy, Cambodia was hit by the global oil price shock. High inflation, largely driven by rising food and fuel prices weigh on real income and household purchasing power, in turn constraining the recovery of private consumption.
“In the second quarter of 2022, the economic recovery gained momentum as investment and trade expanded. Approved FDI [foreign direct investment] project value reached $315 million in the second quarter of 2022,” it said.
The MPO added that non-gold merchandise exports “accelerated further, expanding at 33.0 per cent year-on-year during the first seven months of 2022, driven mainly by a recovery of [GTF] exports.
“GTF exports to the US, Cambodia’s largest exports market, remained robust, growing at 39.1 per cent year-on-year during the first seven months of 2022. The services sector, especially the travel and tourism sector also improved.
“Driven by rising food and fuel prices, consumer price inflation surged. However, inflation eased to 5.4 per cent in July 2022, down from 7.8 per cent in June 2022. The exchange rate continued to be stable at 4,100 riel per US dollar,” it added.
Similarly, the International Monetary Fund (IMF) earlier this month downgraded its 2022 growth forecast for the Kingdom’s real GDP to five per cent, from 5.1 per cent in late April, as well as the 2023 estimate to nearly 5.5 per cent, from over six per cent earlier in the year.
At a virtual press briefing on September 20, Alasdair Scott, the IMF’s mission chief for Cambodia, said: “The Cambodian economy has been recovering, but faces new challenges. GDP growth rebounded in the second half of 2021, driven mainly by exports of goods.
“Despite the new pressures, the recovery is projected to continue [into 2023] … supported by the continued recovery of tourism and ongoing policy support, although dampened by external pressures and the impact of rising prices on real disposal income.
“Inflation is expected to peak this year, be lower in 2023, and decline further thereafter, assuming it remains mostly confined to imported goods,” he said.
The WB’s MPO went on to say that in 2023, the Kingdom’s economic growth “is expected to improve to 5.2 per cent, 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 added.
