PHNOM PENH, May 18, 2023 - Cambodia's economy is firmly on a path to recovery, led by manufacturing exports and growth in services and agriculture, the World Bank said in a report today.
Cambodia's economic recovery solidified in 2022, when real growth accelerated to 5.2%, according to the World Bank's Cambodia Economic Update: Post -COVID-19 Economic Recovery. A strong rebound in services, especially trade, travel, and hospitality has helped bring Cambodia back to pre-COVID-19 growth levels, with foreign arrivals accelerating as the country hosts the Southeast Asian Games and ASEAN Para Games. This revival is also boosted by easing domestic prices as global oil and food prices stabilize.
With the agriculture sector expanding due to improved access to regional markets following newly ratified trade agreements, economic growth is forecast to accelerate to 5.5% in 2023. However, an extended slowdown in external demand could weaken export-oriented manufacturing, while continued global financial tightening might expose risks in Cambodia's highly leveraged financial sector.
"To safeguard its economic recovery, Cambodia needs to diversify its tourism products and destinations and improve its trade competitiveness by boosting connectivity, reducing trade barriers, and streamlining customs procedures," said World Bank Country Manager for Cambodia Maryam Salim.
In the medium term, growth is expected to rise to 6 percent, bolstered by strong goods and services exports and a substantial increase in investment, especially under public-private partnerships for large infrastructure projects such as seaports and roads. Cambodia can aid this growth through investing on connectivity infrastructure and human development, safeguarding financial stability, and promoting diversification of exports to enhance the economy's resilience and competitiveness.
A special focus section of the report examines how Cambodia has been able to increase social sector spending in recent years, notably on health and education, while noting that the quality of that spending could be improved. A stronger focus on both allocative and operational efficiency could help address the uneven distribution of teachers among grade levels and low public trust in state health facilities.
The Cambodia Economic Update focuses on short- and medium-term macroeconomic developments and is published twice a year.
Last Updated: May 18, 2023
