June 06, 2024
According to the World Bank’s Cambodia Economic Update, which was published today, Cambodia’s economic activity increased in the first quarter of 2024 despite subdued domestic demand. This growth was fueled by a resurgence of services and products exports.
The economy is predicted to increase by 5.8% in 2024, up from 5.6% in 2023, and then by 6.1% in 2025 and 6.4% in 2026 as exports of apparel, travel products, and shoes and tourism continue to spur the recovery.
“To sustain economic growth, Cambodia needs to maintain macro-financial stability by restoring fiscal space and safeguarding its financial sector,” said World Bank Country Manager for Cambodia Maryam Salim. “Cambodia can also strengthen competitiveness by improving the business climate, streamlining trade procedures at borders, making the energy supply more reliable, and strengthening education.”
Arrivals of tourists improved further in the first quarter, reaching 84% of pre-pandemic levels. While exports of non-garments, particularly agricultural commodities, remained strong, exports of clothing, travel items, and footwear saw a recovery. After the United States, the Association of Southeast Asian Nations (ASEAN) has become Cambodia’s second-biggest export destination. The recovery was also aided by increased foreign investment in manufacturing and agriculture.
Food prices decreased in March, causing inflation to drop to zero. In contrast, the current account saw an unprecedented surplus in 2023 as the trade deficit shrank and tourism receipts increased.
Since the slump in the real estate market persists, construction activity remains subdued. Consequently, the expansion of domestic credit has decelerated considerably, adversely affecting both private consumption and domestic revenue collection.
(Source: The World Bank)
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