Cambodia’s economy displayed significant recovery signs throughout the first quarter of 2024, propelled by robust exports of services and goods, despite subdued domestic demand, according to the latest World Bank Cambodia Economic Update.
Forecasts by the World Bank project Cambodia’s economic growth to climb modestly to 5.8% in 2024 from 5.6% in 2023. Predictions suggest further acceleration to 6.1% in 2025 and 6.4% in 2026, fueled by vigorous exports in the garment, travel goods, and footwear sectors, complemented by a revival in tourism.
Maryam Salim, World Bank Country Manager for Cambodia, emphasized the necessity of maintaining macro-financial stability to sustain growth. She advocated for measures including the restoration of fiscal space, safeguarding the financial sector, and enhancing competitiveness through streamlined trade procedures, reliable energy supply, and educational advancements.
The report also highlighted significant recovery in international tourism, with arrivals reaching 84% of pre-pandemic levels during the first quarter of 2024. Additionally, resilience in non-garment exports, particularly agricultural commodities, underscored the robustness of the sector. With the ASEAN region emerging as Cambodia’s second-largest export market after the United States, and rising foreign investment in manufacturing and agriculture, the economic landscape appears increasingly vibrant.
A notable achievement was the reduction of inflation to zero in March, aided by decelerating food prices, while the country recorded a significant current account surplus in 2023, driven by a reduced trade deficit and enhanced tourism revenues.
Despite these gains, the construction sector faced challenges, continuing to struggle amidst ongoing property market corrections. This slowdown in domestic credit growth has implications for private consumption and domestic revenue collection.
The World Bank’s special focus section discusses potential strategies for enhancing Cambodia’s education system to elevate worker skills and productivity. Recommendations include escalating investments in early childhood and primary education, amplifying teacher effectiveness, and ensuring equitable resource distribution.
As Cambodia steers its recovery trajectory, strategic enhancements in export sectors and tourist services are setting the stage for a resilient economic future.
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