COVID-19 Down Grade Cambodia’s Economic Groowth to 2.3 Percent
AKP Phnom Penh, April 03, 2020 —
After two decades of strong performance, Cambodia’s economic growth is expected to drop to 2.3 percent in 2020. This is due to the new coronavirus disease (COVID-19) pandemic, the resulting economic slowdown in the major advanced economies and the People’s Republic of China and the country’s reduced access to export markets, according to the Asian Development Bank’s (ADB) flagship annual economic publication Asian Development Outlook (ADO) 2020 released today.
“Cambodia’s economy is expected to rebound to 5.7 percent in 2021, assuming that the pandemic ends and economic activity normalises,” said ADB’s Country Director for Cambodia, Ms. Sunniya Durrani-Jamal. She noted further “Facing unprecedented challenges posed by COVID-19, the Royal Government of Cambodia has taken the right steps to respond to the crisis, including providing wage support for garment workers and tax and credit relief for businesses. The government has also created the fiscal space to minimise the economic impact of this crisis, especially on the most vulnerable people.”
Cambodia’s services sector is expected to contract by 1.7 percent in 2020, as tourism drops and growth in real estate slows. Industry growth is forecast to slow to 6.5 percent, with deceleration in garment production for exports and slower growth in construction. Inflation is expected to remain low, averaging 2.1 percent in 2020 and remain subdued in 2021, as international fuel prices remain low, according to this news report.
The ADO highlights the government’s commitment to diversifying the non-banking financial sector and developing local capital markets to provide much needed financing for diversified investment and growth.
Ms. Durrani-Jamal said the government’s focus should be on COVID-19 containment, without which the recovery of the tourism and services sectors will be difficult. She said the government can draw from a US$6.5 billion COVID-19 response package ADB announced on Mar. 18 to meet the immediate needs of its developing member countries to stimulate their economies and provide social protection.
Under ADB’s 2019–2023 Country Partnership Strategy, ADB will provide US$1.45 billion in loans, grants, and technical assistance to Cambodia for agriculture and natural resources management; improved urban and rural living conditions; renewable energy infrastructure; and education and skills development. These initiatives aim to improve the access to and the quality of services for Cambodians, and improve the business and investment environment.
Cambodia has been maintained stable economic growth with annual average 7 percent during last two decades.
By Khan Sophirom