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World Bank projects Cambodia’s 2022 growth at 4.5%
Cambodia’s economy is expected to grow by 4.5 percent in 2022, according to the latest World Bank projections.
Weathering the Oil Price Shock, the Bank’s June 2022 economic update for Cambodia, shows that while domestic economic activity and goods exports continue to recover from the slowdown caused by Covid-19, growth remains uneven, with the war in Ukraine driving inflation.
The bank’s Cambodia Economic Update, June 2022, shows that during the first quarter of 2022, goods exports rose to $4.8 billion, up by 26 percent from last year. Traditional growth drivers, especially garments, travel goods, and footwear continue to expand but newer manufacturing industries, such as for electrical and vehicle parts, are also emerging. The report noted that the exports to the US have been surging.
It cautioned that although domestic economic momentum is strong, recovery is held back by deteriorating global demand. Rising global energy and food prices are fueling higher inflation, the report pointed out.
In Cambodia, poor and vulnerable households with limited savings are likely to bear the brunt of the oil price shock, it said. The fiscal deficit is expected to widen to 6.3 percent of GDP, as the government will need to continue spending programmes to support the poor, the bank’s report indicated.
Maryam Salim, World Bank Country Manager for Cambodia, said, “The government’s Living with COVID-19 strategy has allowed Cambodia to reopen, enabling economic recovery. However, the road ahead remains unclear. Rising energy and food prices due to the war in Ukraine are imposing additional burdens on the poor, and this will slow the pace of poverty reduction. The government’s cash transfer programme, which has been vital to poor households during the pandemic, will continue to be needed.”
The report said that over the medium term, the economy is expected to grow at around 6 percent annually, with the new investment law, together with free trade agreements, helping to boost investment and trade. The report recommended policies that can help sustain economic recovery. These included continued efforts to contain the Covid-19 infection, strengthening consumer and investor confidence, promotion of exports, particularly in agricultural commodities, by facilitating trade and reducing the costs of doing business, and stabilisation of retail prices.
The report also included a special focus section on post-pandemic supply chain disruptions. It suggested strategies for reducing logistic costs and emphasised that efforts to increase Cambodia’s trade competitiveness and enhance its connectivity would require a systematic approach that goes beyond the improvement of physical assets.
Efforts are needed to strengthen the entire supply chain by monitoring the efficiency of trade gateways and routes, expanding the “Best Trader scheme” to the wider logistics sector, developing a longer-term business plan for railways, and establishing the “Roadwatch,” hotline, through which traders and citizens can report irregularities. Implementing these reforms will require an institutional approach and a lead government agency that can oversee logistics development at the national and gateway levels, it added.
Source: https://www.khmertimeskh.com/501104573/world-bank-projects-cambodias-2022-growth-at-4-5/