Economic forecast for 2021 projects 3.5 percent GDP growth
Economic forecast for 2021 projects 3.5 percent GDP growth
The Kingdom is forecast to register gross domestic product (GDP) growth of 3.5 percent, a sharp reversal of 2020’s contraction of 3.1 percent, the Ministry of Foreign Affairs and International Cooperation has said in its macroeconomic situation report.
After registering 7.1 percent GDP growth in 2019, the Kingdom is forecast to reach GDP growth of 6.9 percent by 2024.
The industrial sector is poised to fuel the bulk of that growth, followed by services, real estate and business and agriculture.
The overall industrial sector is forecast to grow by 5.9 percent because of increased garment exports but will be held back by low capital investment in construction. The sector’s growth retracted by 1.2 percent in 2020.
The garment segment is forecast to grow by 4.6 percent and construction by 2.9 percent. Both the garment and construction industrial sub-sectors retracted last year. In 2020, the garment industry shrunk by 6.4 percent with the construction segment contracting by 2.4 percent last year.
The ministry projected that the garment sector will grow by 4.6 percent in 2021 versus its 6.6 percent pre-pandemic growth due to an anticipated slow recovery in external demand.
“Already, the situation is better than in 2020 with the vaccine rollouts and the optimism surrounding them. Growth is expected to be over that of 2020, but I cannot comment on how much,” Ken Loo, Secretary-General for the Garment Manufacturers Association of Cambodia, told Khmer Times.
“Cambodia will face stronger market competition due to the containment of the pandemic, the impact of the changes to the Everything But Arms preferential trade deal with the EU, Vietnam’s free trade agreement with the EU and lower growth in labour productivity,” GMAC said.
To address these difficulties, the ministry has offered three solutions including increasing productivity, reducing costs associated with electricity, transportation and logistics and the promotion of trade.
The services sector is forecast to grow by 3.4 percent led by the transportation and communications segment. That segment is projected to grow by 4.5 percent.
The hotel and restaurant segment is forecast to grow by 0.3 percent. It retracted a staggering 36 percent last year.
The 2021 projection sees the wholesale and retail trade services segment growing by 3.2 percent, with the agriculture sector projected to grow by 1.3 percent with crop production contributing 1.6 percent to that increase.
Inflation is projected to rise for the third consecutive year, from 2.8 percent in 2020 to 3.1 percent this year due to an expected increase in international oil prices.
The value of the riel against the $US is predicted to drop to 4,065 riels from 4,080 in 2020.
The Kingdom’s international reserves grww to $21.33 million last year from $18.76 million in 2019. Khmer Times
