NBC: 4% economic growth in 2021
The National Bank of Cambodia (NBC) on December 31 forecast that the Kingdom’s economic growth will return to four per cent growth this year if Covid-19 vaccines can successfully curtail the spread in the first half.
The central bank’s forecast published in its Macroeconomic and Banking Progress 2020 Report matches the forecast made by the Washington, DC-based World Bank in December.
Inflation is expected to remain below three per cent, a “manageable low” which the NBC is optimistic it can ensure through a “stable exchange rate” and an “increased maintenance of international reserves”.
The NBC said: “International financial institutions have forecast that Cambodia’s economic growth rate could reach four-to-6.8 per cent [in 2021].
“However, these forecasts depend primarily on the effectiveness of the [Covid-19] vaccines, the speed of growth recovery in Cambodia’s economic partners and the strengthening of the local economic base.
“In this context, further strengthening of domestic economic activity will support and reduce the impact on Cambodia’s economic growth due to the external downturn.
“Therefore, the continued implementation of government policies to promote the development of small and medium-sized enterprises, the promotion of innovation and the use of new technologies in all areas is very important to strengthen the growth base of domestic activity.”
According to the NBC, agriculture will remain a vital and high-potential sector that could absorb some of the economic fallout stemming from the crisis, such as unemployment or support for the poor.
Accelerating the diversification of the economic base and the implementation of industrial development strategies will help Cambodia’s economy recover faster from the pandemic, it said.
The advent of oil production will provide the Kingdom another source of funds for the national budget and the future development of priority sectors, it added.
World Bank country manager for Cambodia Inguna Dobraja in mid-December said challenges remain for the Kingdom and Covid-19 has created a need to scale up job creation and stem the unemployment tide.
She said: “Significant uncertainty remains to Cambodia’s growth outlook. The most important policy goal must be to urgently regain jobs lost and suspended due to the pandemic.
“Looking ahead, it is essential that domestic and foreign investments are encouraged to take advantage of recent bilateral and regional free trade agreements.
“This would be possible through prompt introduction of a competitive investment law and incentive schemes, together with moves to improve the ease of doing business.”
Ministry of Economy and Finance spokesman Meas Soksensan recently told The Post that government intervention efforts have helped stabilise the economy to maintain satisfactory progress.
He said: “The government is very pro-active in its response to the impact caused by Covid-19, dealing with it in an immediate way. This builds confident among investors as evident in the still-robust investment and business climate.
“Other barriers impeding investment and business growth have been swiftly handled by the government, leading its trajectory along an improved path.”
Cambodia’s economy is projected to return to four per cent growth in 2021, the World Bank said, citing an improvement in economic activities and the effective implementation of the government’s intervention measures to keep the economy afloat amid Covid-19.
To quickly recover from the pandemic and ensure a return to growth in 2021, the World Bank recommends in its report that Cambodia pursue a number of key measures.
The Kingdom must boost “pro-poor and growth-enhancing public investment including cash-for-work projects” and promote “labour-intensive sectors to generate jobs by taking advantage of the quick recovery of domestic demand for consumer goods”, the World Bank said.
It must also provide “opportunities to facilitate an expansion of domestic and foreign investment arising from recent bilateral and regional free trade agreements, including the Cambodia-China Free Trade Agreement and Regional Comprehensive Economic Partnership”, it added.
It also recommended a “strong Covid-19 vaccine infrastructure, as well as closely monitoring economic vulnerabilities arising from the prolonged construction and property boom”.