The Asian Development Bank (ADB) has released forecast figures showing Cambodia’s real economic growth will reach 2.3 percent this year, 0.2 percent lower than a report released earlier this week by the World Bank.
The ADB says that after two decades of strong performance, Cambodia’s economic growth is expected to drop to 2.3 percent in 2020, as a direct result of the COVID-19 pandemic that will cause significant global slowdown to major economies like China, the US and the European Union, resulting in the reduction of Cambodia’s access to vital export markets, according to the ADB’s flagship annual economic publication titled, Asian Development Outlook 2020 released today.
“However, Cambodia’s economy is expected to rebound to 5.7 percent in 2021, assuming that the pandemic ends and economic activity normalises by the end of the year,” said ADB’s Country Director for Cambodia, Sunniya Durrani-Jamal.
She added, “Facing unprecedented challenges posed by COVID-19, the Cambodian government has taken the right steps to respond to the crisis, including providing wage support for garment workers and tax and credit relief for businesses. The government has also created the fiscal space to minimise the economic impact of this crisis, especially on the most vulnerable people.”
The ADB says that Cambodia’s services sector is also expected to contract by 1.7 percent in 2020, as tourism drops and growth in real estate slows. Industry growth is forecasted to slow to 6.5 percent, with a deceleration in garment production for exports and slower growth in construction.
While inflation is expected to remain low, averaging 2.1 percent in 2020 and will remain subdued in 2021, with international fuel prices remaining low. The report highlights the government’s commitment to diversify the non-banking financial sector and developing local capital markets to provide much-needed financing for growth.
Durrani-Jamal said, “The government’s focus should be on COVID-19 containment, without which the recovery of the tourism and services sectors will be difficult and added that the government can draw from a $6.5 billion COVID-19 response package the ADB announced on Mar 18 to meet its immediate needs to stimulate the economy and provide social protection.”