Cambodia: Tourism recovery in full swing, says ADB
The tourism recovery is in full swing in Asia and the Pacific, including Cambodia, according to the Asian Development Outlook (ADO) July 2023, released yesterday.
The sample was restricted to economies where tourism accounted for at least five percent of gross domestic product in the latest year with available data.
“Revenge travel continues to lift tourist arrivals and related activities. In addition, while still subdued, China’s recovery supports the demand for agricultural exports from the subregion,” the ABD outlook pointed out.
Though ADB maintained its growth forecasts for most subregions in Asia and the Pacific, the agency lowered its outlook for Southeast Asia to 4.6 percent this year and 4.9 percent next year, compared with April estimates of 4.7 percent and 5.0 percent, respectively.
“Weaker global demand for manufactured exports has slowed growth even as domestic demand remained intact. Private consumption continued to be the primary driver of economic growth in the first half of 2023, buoyed by improved labour market conditions and income across Southeast Asia,” ADB said.
It said inflation is expected to continue falling, approaching pre-pandemic levels as fuel and food prices decline. Inflation in developing Asia is forecast at 3.6 percent this year, compared with an April forecast of 4.2 percent. The inflation outlook for 2024, meanwhile, is raised to 3.4 percent from an earlier estimate of 3.3 percent.
ADB, which cautioned that the industrial activity in export-oriented economies has weakened following slow global demand, said the reopening of the People’s Republic of China (PRC) is bolstering the region’s growth.
China’s economy is projected to expand 5 percent this year, unchanged from the April forecast, amid strong domestic demand in the services sector.
However, it pointed out that the demand for developing Asia’s exports of electronics and other manufactured goods is slowing, as monetary tightening drags on economic activity in major advanced economies.
“Asia and the Pacific continue to recover from the pandemic at a steady pace. Domestic demand and service activity are driving growth, while many economies also benefit from a strong recovery in tourism. However, industrial activity and exports remain weak, and the outlook for global growth and demand next year has worsened,” ADB Chief Economist Albert Park.
In its Asian Development Outlook (ADO) 2023, published in April, ABD predicted Cambodia’s GDP growth at 5.5 percent this year and 6 percent next year.
It said the economy is estimated to grow on more robust tourism recovery and higher growth in the services sector.
According to the outlook, Cambodia’s tourism and agriculture sectors are expected to grow 7.3 percent and 1.1 percent, respectively this year. The tourism growth is set to ease to 6.8 percent while agriculture is predicted to grow at 1.2 percent next year. However, the industry is estimated to grow slower at 5.8 percent and 7.8 percent in 2023 and 2024, respectively.
Launching the report, ADB Country Director for Cambodia Jyotsana Varma said: “Cambodia’s economic outlook is positive with robust growth, shrinking current account deficit and moderate inflation in 2023.”
Agriculture is estimated to grow, boosted by crop production for exports.
Meanwhile, the World Bank in its May 2023 Economic Update said that weakening external demand is affecting Cambodia’s recovery.
Global growth is slowing sharply in the face of elevated inflation, higher interest rates, reduced investment, and disruptions caused by Russia’s invasion of Ukraine. Attributable largely for the decline in exports to the US and EU markets, total goods exports contracted at 14.2 percent y/y during the first two months of 2023, compared to an average growth rate of 6.7 percent in 2019, it pointed out.