“Industry, services, and agriculture will be the three primary economic sectors driving Cambodia’s economic growth in 2023.”
In the second half of 2021, exports of goods helped Cambodia’s GDP growth get back on track. But in 2022, the economy was impacted by changes in China, a slowdown in consumer demand in developed countries (the US and Europe are important markets for Cambodian goods), and tighter global financial conditions.
Despite the new challenges, it is anticipated that the recovery will continue. As a result of the robust export performance earlier in 2022, real GDP growth is anticipated to reach 5.5 percent in 2023, supported by the continued recovery of tourism and ongoing policy support but tempered by external pressures and the impact of rising prices on real disposable income. Inflation is expected to fall from 5% in 2022 to 2.5% in 2023.
It is anticipated that the public finances will gradually improve. In 2021, spending pressures and lower-than-anticipated tax receipts led to a fiscal deficit of little more than 7 percent of GDP.
With a robust rebound in revenues, the deficit is projected to reduce to a little over 4 percent of GDP in 2023 and then drop further thereafter.
The economy is still built on the same key pillars. Due to a number of factors, exports of garments, construction and real estate, tourism, and agriculture should all continue to grow in 2023. The garment and construction sectors are expected to grow by 9.2 percent in 2023, while the service sector (including tourism and real estate) is set to grow by 6.6 percent and agriculture will grow by 1.1 percent.
The directors of the International Monetary Fund applauded Cambodia’s robust economic recovery from the pandemic, which was assisted by the country’s large emergency funds and effective crisis response. However, there are indications that there may be a slowdown in demand in the export markets in Europe and the United States; yet, the success of RCEP and other initiatives, as well as new trade agreements, may also be able to counteract this.
According to the International Monetary Fund, the Cambodia-China Free Trade Agreement and the Regional Comprehensive Economic Partnership would help Cambodia’s economy grow in the medium term.
Samdech Hunsen, the Prime Minister of Cambodia, recently said that taxes alone bring in more than $6 billion for the Kingdom. The Royal Government of Cambodia forecasts that the Cambodian economy will grow by 6.6 percent in 2023 and that the average income of Cambodian citizens will rise to $1,924.
Additionally, the Asian Development Bank predicted that Cambodia’s GDP would grow by 6.2% in 2023.
“When learning is purposeful, creativity blossoms. When creativity blossoms, thinking emanates. When thinking emanates, knowledge is fully lit. When knowledge is lit, economy flourishes.”
― A.P.J. Abdul Kalam
