The World Bank (WB) has maintained its 2022 economic growth forecast for Cambodia, issued in September, at 4.8 per cent, highlighting the Kingdom’s remarkable post-Covid-19 economic recovery.
Although the WB’s projection is higher than the government’s 4.3 per cent estimate, the Washington-based multilateral lender warns that global headwinds expected in the coming months could undermine its outlook.
In September, the International Monetary Fund (IMF) had downgraded its 2022 growth forecast for Cambodia’s real gross domestic product (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 more than six per cent earlier in the year.
The WB said in a December 7 statement that the Kingdom’s “garment industry, travel goods and footwear exports have been resilient.
“The services sector, especially travel and tourism, has done well since the introduction of the ‘Living with Covid-19’ strategy in late 2021, and total international visitor arrivals have steadily increased, reaching 1.2 million in the first nine months of 2022. Business and consumer confidence have risen and both domestic and foreign investment have increased,” it added.
Speaking in the statement, Mariam Sherman, WB country director for Cambodia, Laos and Myanmar, recommended the Kingdom take action to bolster its tourism industry and broader economy, as well as consolidate its fiscal position, to brace for potential external demand shocks.
“Revenues are up, thanks to the economic recovery and administration improvements,” Sherman said. “Broadening the tax base will help ensure the resources needed to promote Cambodia’s economy and weather slowing growth among major trading partners. Tourism and hospitality are particularly promising areas for growth.”
The statement added that Cambodian economic growth is projected to improve to 5.2 per cent next year “as increased hiring supports rising domestic consumption and as inflation recedes.
“Cambodia has a small economy that is open to outside trade and investment, and the global growth outlook is gloomy. Global trade growth slowed in the second half of 2022 and is projected to slow sharply in 2023.
“The economies of developing countries such as Cambodia are particularly vulnerable to rising inflation, slower global economic growth, decreased availability of energy supplies, and higher interest rates.
“Cambodia’s manufacturing sector depends on export markets to thrive and would be negatively affected by an extended growth slowdown in its two largest export markets, the United States and the European Union.
“Similarly, investment and capital inflows would likely diminish as a result of a sustained slowdown in its largest source of foreign direct investment [FDI], China.
“Looking farther into the future, Cambodia’s economy is expected to advance to a growth rate of around six per cent, as international and domestic tourism adds strength. Participation in recently concluded trade agreements can boost agriculture and agro-processing industries,” the WB said.
Offering a rosier outlook for 2023, the Ministry of Economy and Finance on November 28 revealed its projection that Cambodia’s economy would grow by 6.6 per cent, with the year’s GDP per capita reaching $1,924.
Using a conversion rate of 4,065 KHR per USD, the draft Law on Financial Management for 2023 estimates that GDP will hit 131.276 trillion riel next year, or about $32.291 billion, resulting in a nearly eight per cent jump from the $1,785 GDP per capita forecast for 2022. This indicates an assumed population of nearly 16.8 million for 2023.
By comparison, Worldometer elaboration of the latest UN data indicates an approximate population of around 17.3 million for Cambodia at present.