NBC forecasts robust growth
NBC forecasts robust growth
The National Bank of Cambodia (NBC), has predicted a healthier economic growth rate coupled with a decline in inflation for Cambodia in 2024 amidst a global economic climate facing headwinds due to geopolitical tensions and rising interest rates.
In its latest report issued on Monday, the central bank forecast that Cambodia’s Gross Domestic Product (GDP) is expected to expand by a robust six percent in 2024, supported by improved external and domestic conditions.
Global growth was predicted at 3.2 percent this year by the IMF, higher than the previous forecast, mainly on account of greater-than-expected resilience in the US and faster economic recovery in China, which are also Cambodia’s main trading and investment partners, stated the central bank.
“The Cambodia’s economy is supported mainly by exports, both garment and non-garment products, increasing of tourism sector and related sectors, while agricultural sector grows at a slower pack,” said NBC Governor Chea Serey at a workshop on the occasion of the launching of the Financial Stability Review 2023 on May 20.
“The Regional Comprehensive Economic Partnership (RCEP) and other Free Trade Agreements (FTAs) could attract more FDIs and help Cambodia to diversify its productions and exports,” Serey said.
The report acknowledged potential challenges, including geopolitical tension, prolonged tightening of monetary policies in advanced countries, weaker-than expected growth in China, and climate change.
Those risks could cause slower global economic and trade activities, which could affect exports, investment, and capital flows into Cambodia.
The Governor further highlighted the resilience of Cambodia’s banking system amid the successive external challenges.
“Facing these potential challenges, the NBC will continue collaboration with relevant authorities to ensure the strength of Cambodia’s banking system and will introduce necessary measures forward to support economic growth and maintain the national financial stability,” she said.
Cambodia’s economic growth is mainly driven by garment export, tourism, agriculture, as well as construction and real estate.
Prime Minister Hun Manet said in April that Cambodia’s strategic membership in regional and global trade agreements positions the country as a highly integrated player within the dynamic global markets.
Cambodia has undergone a remarkable transformation, evolving into a modern and globally integrated economy, giving a promising economic future, the Prime Minister said.
“The Cambodian economy has shown remarkable resilience and is projected to return to the pre-pandemic growth rate of around 7 percent by 2028,” said the premier.
Despite a stronger economic growth rate, NBC predicted that inflation in Cambodia is projected to remain low and manageable.
The inflation rate, which reached a peak of 2.1 percent in 2023 due to rising global fuel and food prices, is projected to fall to 2 percent by year-end.
This is attributed to a combination of factors, including government interventions to stabilize prices of essential goods and the anticipated easing of global commodity prices.
