The Asian Development Bank (ADB) has recently updated its economic outlook for Cambodia, confirming expectations for sustained growth in the coming years. The latest forecast anticipates the nation’s economy to grow by 5.8% in 2024 and further accelerate to a 6.0% growth rate in 2025. These projections underline a steady economic expansion, supported by a vibrant manufacturing sector and burgeoning areas such as tourism and agriculture. Additionally, the bank has adjusted its inflation expectations for 2024, projecting a lower rate of 0.5% compared to the initially estimated 2.0%. This revision is primarily attributed to a moderated increase in food prices and a notable decrease in fuel costs witnessed in the first half of 2024.
A significant contributor to Cambodia’s economic momentum is the recovery and growth in its manufacturing sector, particularly in the production of garments, footwear, and travel goods (GFT). This resurgence not only highlights the sector’s robustness but also signals a positive outlook for the nation’s export capabilities. “The renewed vigor in the manufacturing sector is driving the country’s economic growth,” stated Jyotsana Varma, the ADB Country Director for Cambodia. “Moreover, the agricultural sector and tourism industry are making commendable strides, further bolstered by a steady influx of foreign direct investments.”
The reduction in inflation is also a positive signal for Cambodia’s economy, reflecting lower costs in fuel and fertilizers, which are crucial for the agricultural sector. This adjustment is expected to alleviate the financial strain on Cambodia’s vulnerable populations, who have been disproportionately impacted by the escalation of food and fuel prices in recent years.
The ADO report from September 2024 provides an in-depth analysis, indicating a 16.9% increase in GFT exports in the first half of the year, a significant rebound from a decline witnessed during the same timeframe in the previous year. While exports in non-GFT products have seen a slowdown, the import of construction materials and equipment has experienced a sharp rise by 23.3%, stimulated by public investments in infrastructure.
Agricultural growth is cautiously estimated at 1.2% for 2024 and is expected to see a slight improvement in 2025. The services sector, buoyed by a substantial 22.7% increase in tourist arrivals – nearing pre-pandemic levels – is forecasted to grow by 5.4% in 2024. Foreign direct investment, though slightly reduced from the previous year, continues to support the country’s economic development, emphasizing a solid growth foundation in non-financial sectors.
Yet, the economic outlook is not devoid of challenges. Risks such as diminished growth in key global economies, rising private debt levels, fluctuations in global fuel prices, and the potential impacts of extreme weather conditions loom over these positive forecasts. These factors could influence the pace of Cambodia’s economic growth and require vigilant monitoring.
The ADB, established with the mission to foster a prosperous, inclusive, resilient, and sustainable Asia-Pacific region, remains dedicated to aiding Cambodia in its path towards sustained economic growth. The bank’s ongoing support highlights its commitment to mitigating poverty in the region and backing member countries in their development endeavors. Through collaborative efforts and strategic planning, Cambodia’s economic landscape shows promising signs of robust growth and stability in the years to come, aligning with broader goals for regional prosperity and resilience against the backdrop of global uncertainties.
Source: Fresh News
