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Cambodia: Gov’t predicts V-shaped recovery, economic experts disagree
The Cambodian government is optimistic that the nation’s economy will see V-shaped growth in the wake of the Coronavirus pandemic, in direct contrast to the U-shaped recovery economic experts are predicting.
Phay Siphan, the government’s chief spokesman, made the statement at a news conference held last week addressing the state of the country’s aviation industry.
Phay said he has based his conclusion on Cambodia’s decision to allow the cruise ship, the MS Westerdam, to dock in Sihanoukville in February after five other nations, including Japan and Thailand, would not offer safe haven amidst COVID-19 fears.
“There will be a boom in the tourism industry when people are once again allowed to travel and I believe that foreign tourists will flock to our country in return for
our kindness in the MS Westerdam matter.”
In economic terms, leading business and markets experts Bloomberg.com describe a V-shaped recovery as a trajectory ‘in which the rebound is swift as the slump’. But Hong Vannak, a business researcher at the Royal Academy of Cambodia is one of several experts warning the recovery is more likely to be U-shaped, meaning it could take up to two years to regain economic stability.
“This is due to the fact that tourism, a priority sector in the country, has all but been destroyed. It will take time for traveller confidence to return and that will ultimately shape the recovery,” he said.
Hong added that the agriculture sector, which already faced pre-pandemic issues, will also be key to economic recovery.
“The approach to rebuilding and strengthening this crucial cornerstone of the national economy is by increasing the value chain,” he said.
The garment and export industry – which netted Cambodia $9.35 billion in 2019, a year-on-year increase of 11 percent – is also expected to follow a U-shaped recovery. This is in part due to the EU’s decision to partially suspend preferential tariffs previously applied to the garment exports received from Cambodia. These accounted for some 90 percent of the Kingdom’s total garment exports.
The World Bank and ADB have predicted the Kingdom’s real economic growth will slow to around 2.5 percent and 2.3 percent this year respectively as a direct result of the pandemic.
In further sobering news, the International Monetary Fund (IMF) has predicted Cambodia’s 2020 Gross Domestic Product will contract by -1.7 percent this year. However, the growth rate will recover to 5.9 percent in 2021 under a baseline scenario, according to a World Bank report.
Source: https://www.khmertimeskh.com/50714665/govt-predicts-v-shaped-recovery-economic-experts-disagree/