Cambodia Investment Review

World Bank Predicts Accelerated Economic Growth of 5.5% for Cambodia in 2023

World Bank Predicts Accelerated Economic Growth of 5.5% for Cambodia in 2023

Cambodia Investment Review

The World Bank has announced Cambodia’s economy is projected to accelerate with a robust growth rate of 5.5% in 2023. The economic resurgence, as predicted, will be fueled by an expanding agriculture sector, robust services, and manufacturing exports.

The report, titled “Cambodia Economic Update: Post-COVID-19 Economic Recovery,” stated that the country’s economic recovery gained momentum in 2022, with real growth accelerating to 5.2%. A vibrant rebound in the services sector, particularly in trade, travel, and hospitality, has significantly contributed to this upturn, propelling the nation back to its pre-COVID-19 growth levels.

Underscored the need for Cambodia to diversify

Cambodia is also hosting the Southeast Asian Games and ASEAN Para Games this year, leading to an increase in foreign arrivals. Furthermore, the easing of domestic prices due to global stabilization of oil and food prices has enhanced the economic recovery.

Additionally, Cambodia’s agriculture sector has shown promising expansion, facilitated by improved access to regional markets in light of recently ratified trade agreements. As a result, economic growth is projected to rise to 5.5% in 2023.

Read more: Cambodia’s Economy Set to Grow by 30% in Upcoming GDP Revision, According to National Institute of Statistics

Nevertheless, the World Bank cautioned about the potential risks, such as a prolonged slowdown in external demand that could affect export-oriented manufacturing and global financial tightening that could expose vulnerabilities in Cambodia’s highly leveraged financial sector.

World Bank Country Manager for Cambodia, Maryam Salim, underscored the need for Cambodia to diversify its tourism products and destinations and to increase its trade competitiveness. Recommendations include improving connectivity, reducing trade barriers, and simplifying customs procedures.

World Bank anticipates medium-term growth

Looking ahead, the World Bank anticipates medium-term growth to reach 6%, driven by robust goods and services exports and a significant rise in investment. This is particularly true for public-private partnerships that focus on large infrastructure projects like seaports and roads.

To further support this growth, Cambodia is advised to invest in connectivity infrastructure and human development, safeguard financial stability, and promote export diversification.

The World Bank’s report also highlighted the country’s increased social sector spending in recent years, with emphasis on health and education. While acknowledging these efforts, the report emphasized the need for improved quality of spending. A greater emphasis on allocative and operational efficiency could help to rectify the uneven distribution of teachers across grade levels and increase public trust in state health facilities.

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