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Lockdowns, movement restrictions could affect economic outlook
As curfews laid way to lockdowns last week and parts of the capital were designated “red zones” on Monday, the international community is beginning to reassess Cambodia’s economic outlook for 2021.
The Economist Intelligence Unit (EIU), a division of well-respected UK weekly publication, The Economist, will probably downgrade Cambodia’s real gross domestic product (GDP) growth forecast for 2021 from 4.6 percent to between 3 and 4 percent, Nikkei Asia reported.
“The outbreak and ensuing lock- downs will weigh upon consumer and business sentiment, suppressing private consumption [which accounts for around 70 percent of GDP] and fixed asset investment,” Nikkei Asia quoted EIU Analyst Imogen Page-Jarrett as saying.
The International Monetary Fund currently projects that the Kingdom will see real GDP growth of 4.2 percent this year. However, the recent spate of government restrictions to curb the spread of the pandemic has put that into question. Already, the effects of the lockdowns are shaking the hospitality and manufacturing pillars as authorities ordered garment factories to shut and prohibited restaurants from allowing dine-in guests.
Major businesses have also been mandated to operate with a maximum of 2 percent of regular staffing numbers, cutting household incomes for the near future.
Earlier this week, Prime Minister Hun Sen warned the government may be forced to extend lockdown measures by another two weeks if people do not adhere to regulations.
“Households and firms will delay unnecessary purchases and investments, limiting spending to essentials. The lockdowns will also negatively affect disposable income and employment,” Page-Jarrett also said.
Last week, the IMF adjusted its economic forecast for Southeast Asia in large part because of the slower-than-expected recovery in tourism. It readjusted its outlook for Cambodia from 6.8 percent GDP growth to 4.2 percent.
“Tourism is an important driver of growth in many of these countries, notably Thailand, but also Cambodia and Laos, so there is an important degree of uncertainty exactly about when tourism can return and when borders can reopen.
This is going to be dependent on global progress with the vaccine, as well, frankly, as on the health protocols that are introduced at the country level to host tourists coming from abroad,” said Jonathan Ostry, deputy-director at the IMF’s Asia and Pacific Department, on April 13 at an IMF news briefing.
“We have marked down the ASEAN countries, we have the pandemic creating concerns in Indonesia, Malaysia and the Philippines and we have the tourism-dependent countries including Thailand, Cambodia and Laos – those we have marked down. We are both concerned about the outlook for tourism when those markets will reopen and the additional lockdowns and containment measures that the disease’s unexpected turning is creating,” Ostry told CNBC.
The Asian Development Bank forecast in March that a best-case scenario of a two-month outbreak in Cambodia would result in a $283 million loss in GDP, while a moderate case would cause a 1.59 percent drop in GDP, equivalent to $391 million, while a worse-case would result in a $711 million loss.
EIU forecasts that herd immunity, which it defines as 60 percent of the population being inoculated, will not be achieved in Cambodia before 2025 if the current pace of vaccinations continues.
Johns Hopkins University in Baltimore, United States, estimates that 10,202 people are being vaccinated each day in Cambodia. The Ministry of Health announced that more than 1.241 million people had been vaccinated by Friday.
Source: https://www.khmertimeskh.com/50843002/lockdowns-movement-restrictions-could-affect-economic-outlook/