On the back of strong growth in the garment, construction and hospitality sectors, the national economy expanded by 7.3 percent last year, according to the Ministry of Economy and Finance.
Presenting on the ministry’s latest report during a public forum on macroeconomic management and the 2019 budget law, Chheang Vannartith, the ministry’s deputy director-general, said economic growth in 2018 exceeded the government’s expectations.
He said the ministry predicts that GDP will expand at a rate of 7.1 percent in 2019 as a result of strong growth in exports and domestic consumption.
During the first eleven months of 2018, exports rose by 16.3 percent, while imports increased by 22 percent, with Cambodia buying mostly construction materials and fabrics, according to the report.
The garment sector grew by 7.8 percent last year, expanding faster than in 2017 when it grew by 5.8 percent.
With the number of affordable residential projects being raised across the capital growing quickly, the construction sector expanded by 18.1 percent, the report pointed out.
The hospitality sector, benefitting from an ever-increasing number of foreign tourists, expanded by 5.8 percent.
Despite growing faster than in 2017, the agriculture sector expanded by just 1.78 percent last year.
Due to rising incomes and changes in lifestyle, domestic expenditure rose significantly last year, pushing the expansion of retail and wholesale trade, the report noted.
As a result of tax exemptions on key imported goods, including gasoline, price inflation was moderate, the report noted.
Mr Vannarith said during his presentation that the trade war between the US and China will negatively impact Cambodia’s economic growth in 2019, adding also that a slowdown in China’s economy will likely affect the global economy.
“Based on our evaluation, Cambodia’s economic growth will average 7 percent per year in the medium-term. This growth will be mainly supported by two sectors – industry and service,” Mr Vannarith said.
Vongsey Visoth, the ministry’s secretary of state, highlighted the need to diversify production and export markets, particularly in light of EU’s and US’s revision of Cambodia’s preferential trade status.
“With the EU reviewing the Everything-but-arms (EBA) scheme and a trade war between the United States and China, Cambodia needs to diversify away from garments to more complex products,” Mr Visoth said.
Mey Kalyan, senior advisor to the Supreme Economic Council, echoed the same sentiment.
“We have to find new engines to drive the economic growth. If we use the existing old engines, economic growth will be the same or may decrease,” Mr Kalyan said.
“We have to do more than what we are currently doing to keep our economy growing sustainably.”