Cambodia’s Economy Forecasted to Grow by 5 Percent in 2022

Cambodia’s Economy Forecasted to Grow by 5 Percent in 2022

The National Bank of Cambodia (NBC) has forecasted a five percent growth of Cambodian economy this year.

In its Macroeconomic and Banking Sector Development in 2021 and Outlook for 2022 report released late last week, the NBC said the continued global economic recovery will support Cambodia’s exports in both garment and non-garment items, especially the electrical parts and bicycles, promoting diversifications in export.

The construction and real estate sectors are expected to gradually recover in line with the rise in domestic incomes and foreign investment inflows into Cambodia, it pointed out, adding that agriculture sector, which absorbs about one third of total employment, is expected to perform better than 2021.

The implementation of the Cambodia-China Free Trade Agreement (CCFTA) and Cambodia-Korea Free Trade Agreement (CKFTA) would further increase the potential of this sector, especially in agricultural processing and Agri-industry areas, it continued.

On the other hand, it underlined, Regional Comprehensive Economic Partnership (RCEP), which is an agreement between ten ASEAN member states and other trading partners in the region, will also come into effect in early 2022, providing further opportunities for signatory countries to accelerate trades in goods and services, investment, and e-commerce activities.

According to the same source, with the country’s re-opening, domestic economic activities, which include trade, transportation and communication, and domestic tourism, are expected to pick up while international tourist arrivals are expected to increase but a slower pace and subject to the evolution of the pandemic itself. The recovery in tourism sector will have positive effects on the performance of hotel and restaurant sector as well as other supporting service sectors.

On the other hand, the returns of Cambodian migrant workers who acquired experiences and skills from abroad would contribute to the improvement of domestic productivity, especially in agriculture and handicraft. Better economic performance will contribute to an increase in government’s revenues, fiscal buffers, and especially public investment, which will benefit long-term growth efforts.

“Based on this outlook, Cambodia’s economy is optimistically expected to further recover at a faster pace of approximately 5 percent in 2022. Headline inflation is projected to be 2.6 percent primarily driven by subdued food prices as a result of improved supply condition, and the official exchange rate is expected to remain stable at around 4,075 riel per U.S. dollar,” the report said.

The NBC will continue to put in place supportive policies to strengthen the banking system in supporting the economic recovery and maintaining price and financial stability. Meanwhile, digitalisation, which is a news source of growth, will also the banking system to seize opportunities to utilise new financial technology to modernise financial services and promote financial inclusion in line with the new normal and support the Digital Economy and Society Policy Framework of the Royal Government 2021-2035.

The NBC has also prepared the exit strategy to gradually withdraw some of the support measures according to the anticipated economic recovery.

In 2021, Cambodia’s economy would grow at around 3 percent, said Prime Minister Samdech Akka Moha Sena Padei Techo Hun Sen said at the groundbreaking ceremony for the 148-kilometre-long National Road No. 48 improvement project, held in Sre Ambel district, Koh Kong province this morning. AKP