ADB Revises Cambodia’s 2020 Economic Forecast Upward
AKP Phnom Penh, September 23, 2020 —
The Asian Development Bank (ADB) has revised its 2020 growth forecast for Cambodia upward, thanks to the country’s improved agricultural performance and an increase in volume in non-garment manufacturing exports such as bicycles and electronics, according to its news release made public this morning.
The Asian Development Outlook (ADO) 2020 Update, ADB’s annual flagship economic publication, forecasts a 4.0 percent contraction for Cambodia’s gross domestic product in 2020, compared to its June forecast of a 5.5 percent contraction, it pointed out.
“The coronavirus pandemic is an unprecedented global challenge, but fortunately Cambodia has been spared a health crisis. We expect growth to rebound to 5.9 percent in 2021, boosted by supportive government policies social assistance for the poor and financing support for SMEs,” said ADB’s Cambodia Country Director, Ms. Sunniya Durrani-Jamal. “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.”
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. However, increased production of bicycles and electronics pushed up Cambodia’s non-garment manufacturing exports by 30.3 percent year-on-year in the first half of 2020. Total industrial output is projected to rise by 5.1 percent in 2020 if exports of garments, travel goods, and footwear continue to recover.
COVID-19 has had a severe impact on Cambodia’s tourism sector. A gradual reopening is expected in the second half of 2020, but services are forecasted to shrink by 15.1 percent in 2020. International visitor arrivals had fallen by 98.1 percent year-on-year in the second quarter, forcing 3,000 businesses to close and 45,000 workers to lose their jobs.
Risks remain, 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. ADB is supporting the Royal Government of Cambodia’s response to the pandemic and has provided US$250 million in concessional financing to strengthen health systems, expand social protection, and support economic recovery.
Under ADB’s 2019–2023 country partnership strategy, ADB will provide US$1.45 billion 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.
By C. Nika