The World Bank has said that the COVID-19 pandemic is hitting Cambodia’s main drivers of economic growth—tourism, manufacturing exports, and construction, which together account for more than 70 percent of the country’s growth and almost 40 percent of paid employment.
The bank said that Cambodia’s economy in 2020 is expected to register its slowest growth since 1994, contracting by between -1 percent and -2.9 percent, according to ‘Cambodia in the Time of COVID-19’, the World Bank’s latest Economic Update for Cambodia.
It said that the poverty in 2020 could increase among households involved in key sectors like tourism, construction, trade, manufacturing and the garment industry by between 3 to 11 percentage points higher than at baseline, or in the absence of Covid-19. The fiscal deficit could reach its highest level in 22 years.
“The collapse of growth drivers has hurt economic growth and put at least 1.76 million jobs at risks,” the World Bank said.
The report also warns that capital inflows are tapering off, which in turn is triggering the easing of real estate market prices, likely ending the construction boom. With the current large outstanding credit to the construction, real estate, and mortgage sector, nonperforming loans could rise.
“The global shock triggered by the COVID-19 pandemic has significantly impacted Cambodia’s economy,” said Inguna Dobraja, World Bank Country Manager for Cambodia. “The World Bank is committed to helping Cambodia deal effectively with the COVID-19 crisis and strengthen the economy for recovery and future resilience.”