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Productivity, diversification, domestic investment key to Cambodia’s economic recovery: World Bank
Cambodia can regain its sustained economic growth by increasing productivity among firms and workers, diversifying exports, and taking steps to boost domestic investment, the World Bank said in the Cambodia Economic Memorandum.
Cambodia’s growth rate, which averaged a robust 7.7 percent between 1995 and 2019, plunged an estimated 10.1 percentage points to contract by 3.1 percent in 2020 before resuming modest growth of 2.2 percent in the year just ended, the bank said.
It added that the dramatic slowdown in output can be attributed in large part to the COVID-19 pandemic, but Cambodia’s dependence on a narrow range of products, markets, and financing sources left it poorly positioned to absorb the shocks.
“Getting back to a sustainable growth path will require an ambitious reform agenda that focuses on improving the capabilities of Cambodia’s firms, workers, and households; strengthening regulations to address market distortions and improve the enabling environment for business; and investing in infrastructure that supports higher quality growth,” World Bank country manager for Cambodia Maryam Salim said in a news release.
“A number of short and medium term policy actions can support an economic recovery strategy that will allow Cambodia to build back better after the COVID-19 crisis,” she added.
Cambodia has many options to address the lack of diversification and build back stronger, the report said, adding that investing in human capital, supporting more efficient resource allocation through improved market institutions, and improving public investment management can help boost productivity.
Creating added value in agriculture and increasing competitiveness in the services sector could diversify exports, it said, adding that promoting higher savings, encouraging foreign investment in the most productive sectors, and improving financial access could support domestic investment. Xinhua