ADB forecast: 4% economic growth in 2021
Cambodia's economy is forecast to grow 4.0 per cent this year and 5.5 per cent in 2022, as economic recoveries in major trading partners boosts demand for the Kingdom's exports, according to an Asian Development Bank (ADB) report released on April 28.
ADB country director for Cambodia Sunniya Durrani-Jamal said: “The economy contracted by 3.1 per cent in 2020 because of the global coronavirus disease – Covid-19 – pandemic. The government has responded quickly to the recent spike in cases, and we expect the economy to return to growth in 2021.
“This will help increase household incomes, but not all sectors and regions will benefit equally, so it will be essential to closely monitor household welfare and the need for additional support,” she said.
Cambodia Chamber of Commerce vice-president Lim Heng said the country's economic activities will only bounce back if “more and more people get vaccinated”.
He said: "We can only estimate Cambodia's economic growth until we have injected 75 per cent or more [of the population] and can maintain economic stability as well as Cambodia's economic wellbeing.
“Now, some factories have been shut down by the Covid-19 outbreak, which has led to the Cambodian economy continuing to decline.”
He cautioned, however, that if the government cannot control the outbreak “in one or two months … and Covid-19 continues, this forecast will not be met".
According to the Asian Development Outlook (ADO) 2021, industrial production is expected to rise 7.1 per cent in 2021 and 7.0 per cent in 2022 on the back of a rebound in the garments, footwear and travel goods sector, as well as growth in other light manufacturing such as electronics and bicycles.
Agriculture is expected to grow by 1.3 per cent in 2021 and 1.2 per cent in 2022, underpinned by higher crop production after last year's flood damage, continued growth in aquaculture and rising agriculture exports to China.
Services will recover more slowly, expanding by 3.3 per cent in 2021 and 6.2 per cent in 2022. Efforts to contain a local outbreak of Covid-19 that began in February are dampening service sector activities.
Travel restrictions are expected to remain in place for most of 2021, which means tourism is not expected to boost services this year. Real estate is expected to recover from last year's contraction, in line with a similar trend for the construction industry.
Durrani-Jamal said: “The uneven pace of the recovery across sectors will continue to put pressure on some households and firms this year, which will slow down the overall recovery.
“Key risks to the outlook include widening community outbreaks of Covid-19, slower than expected growth for Cambodia's major trading partners such as the US and EU, continued weakness in domestic demand, and stress on financial services and banking,” she said, adding that the government needs to maintain its accommodative fiscal policy stance this year and next to support growth.