Cambodia garment recovery key to boosting industrial output

Cambodia garment recovery key to boosting industrial output

Cambodia’s total industrial output is estimated to rise by 5.1% in 2020 if garment and footwear exports continue to recover, new figures from the Asian Development Bank suggest, as it revises its economic projection for the southeast Asian country.

In an update to its 2020 outlook, the Asian Development Bank (ADB) forecasts a 4.0% contraction for Cambodia’s gross domestic product in 2020, compared to its June forecast of a 5.5% contraction.

It noted that while a sharp drop in orders from Europe and North America led to shutdowns in one-third of Cambodia’s garment, footwear, and travel goods factories during the first half of 2020, increased production of bicycles and electronics pushed up Cambodia’s non-garment manufacturing exports by 30.3% year-on-year in the first half.

“The coronavirus disease (Covid-19) pandemic is an unprecedented global challenge, but fortunately Cambodia has been spared a health crisis,” says ADB country director for Cambodia Sunniya Durrani-Jamal. “We expect growth to rebound to 5.9% in 2021, boosted by supportive government policies, social assistance for the poor, and financing support for small and medium-sized enterprises. These measures, along with much-needed structural reforms, will reduce the direct and indirect impacts of Covid-19 on families and businesses, and help Cambodia’s economy emerge stronger from the pandemic.”

Risks remain, however, such as a continued slowdown in the garment and construction industries, and poor harvests after low rainfall in June and July. Consumer demand may also continue to weaken amid the pandemic, the Bank forecasts.

ADB says it is supporting the Government of Cambodia’s response to the pandemic and has provided US$250m in concessional financing to strengthen health systems, expand social protection, and support economic recovery.

Under its 2019–2023 country partnership strategy, ADB will provide $1.45bn in loans, grants, and technical assistance to Cambodia to support agriculture and natural resources management; improved urban and rural living conditions; renewable energy infrastructure; and education and skills development. These initiatives aim to expand Cambodians’ access to public services and improve service quality, as well as improving the country’s business and investment environment.

Credited: Just Style Apparel Sourcing Strategy/ Michelle Russell