The April 2018 edition of the World Bank East Asia and Pacific Economic Update, released this morning, showed that Cambodia’s growth trajectory is expected to continue. The World Bank’s forecast for Cambodia’s economic growth is 6.9 percent, while the Asian Development Bank and the International Monetary Fund augur 7 percent.
It said that the projected increase will peak there and, in the short and medium term, decelerate at a modest pace. Growth in 2018 is expected to be underpinned by rising government spending and favourable global conditions.
In the medium term, large foreign direct investments and public expenditures in the Kingdom’s infrastructure are expected to boost aggregate demand and expand the economy’s productive capacity.
Sudhir Shetty, the World Bank’s chief economist for East Asia and the Pacific, said that political uncertainty and the upcoming election will not significantly destabilize economic activities.
He said: “…obviously there is the possibility that economic stability [may be affected by] the result of the election … the effects would probably be primarily in the investment sector.
“The … anticipated growth for Cambodia does not take account of that [political uncertainty]. This is true not only for Cambodia, but for a number of countries in the region with elections in the next six to 12 months.
“In each of these [countries] political uncertainty will influence their economic prospects, but what we are laying out here is what we take to be the most likely scenarios; that is not to say there are no conditions imaginable that could hinder growth.”
The report said that risks for Cambodia include threats associated with a prolonged construction boom, potential uncertainty related to the July 2018 general election, and declining external competitiveness. In addition, positive employment prospects seem less certain, because the inevitable wage increases will erode Cambodia’s competitiveness, which is based on cheap labour.