Cambodia stays on growth path, set to expand 6.6%
The Kingdom of Cambodia continues on its high growth path in the post-Covid pandemic scenario and is set to report robust growth this year as well as the next few years, according to the International Monetary Fund (IMF).
According to the IMF projections, Cambodia will grow at 5.1 percent in 2022, 6.2 percent in 2023, and 6.6 percent in 2024.
The IMF in its ‘Regional Economic Outlook Report for Asia and Pacific: Sailing into Headwinds,’ released on Friday attributed the high growth rate of Cambodia to its prudent trade promotion policies, including free trade agreements (FTAs), and swift and high vaccination against Covid-19.
As of October 29, 2022, the number of Covid-19 vaccination doses administered per 100 people in the country increased to 265, which is an exceptional achievement. This makes Cambodia one of the most vaccinated countries in the ASEAN as well as globally.
Cambodia has reported strong consumption, growth of services, and export in the first half of 2022, supported by a high vaccination rate, the IMF report said. The Kingdom is also expected to see a faster than expected recovery in the tourism industry.
Growth during the beginning of 2022 was propelled by post-pandemic recovery, says IMF. Most countries have shifted toward treating Covid-19 as an endemic disease, and mobility indicators in those countries returned to pre-pandemic levels in late 2021 and have remained there, despite waves of infections.
As countries emerge from the pandemic’s disruptions, closures, and hardships, output gaps are shrinking and have already closed entirely in many of the region’s advanced economies. The region (except for China) largely brushed off a wave of Omicron infections, with minimal delays to reopening plans.
This allowed for the continued recovery of the contact-intensive service sector that has been particularly strong in the Association of Southeast Asian Nations (ASEAN) countries. Most countries have reopened their borders to foreign visitors, and tourist arrivals are on the rise. Domestic consumption also recovered and industrial production performed well amid strong demand for manufacturing exports.
These factors led to growth in the first quarter that was generally stronger than expected in the April 2022 World Economic Outlook, particularly among ASEAN emerging markets.
The recovery in the ASEAN is expected to be strong in 2022, because of robust consumption, services, and exports in the first half of the year, etc.
Growth is projected at slightly more than 5 percent in Cambodia, Indonesia, and Malaysia, and 6.5 percent in the Philippines.
Vietnam is benefiting additionally from trade diversion from China and is expected to grow at 7 percent.
Myanmar is expected to begin a moderate recovery, with a growth of 2 percent in 2022.
The growth momentum is expected to moderate somewhat in 2023 for Indonesia, Malaysia, the Philippines, Singapore, and Vietnam. Cambodia and Thailand will instead expand faster as the recovery in foreign tourism is now expected to be more vigorous.
Davide Furceri, deputy division chief of the IMF’s Regional Studies, Asia and Pacific Department, said the Regional Comprehensive Economic Partnership (RCEP) and the Cambodia-China Free Trade Agreement have also given a boost to these growth rates.
“Regarding the trade agreements, I think this is a good step for many countries to the extent it signals international cooperation more broadly,” he said.