Despite facing subdued domestic demand, Cambodia’s economy is projected to grow at 5.8 percent in 2024, according to a recent World Bank report. The forecast suggests further growth, with an anticipated rise to 6.1 percent in 2025 and 6.4 ...Read more
Despite facing subdued domestic demand, Cambodia’s economy is projected to grow at 5.8 percent in 2024, according to a recent World Bank report. The forecast suggests further growth, with an anticipated rise to 6.1 percent in 2025 and 6.4 percent in 2026. This consistent annual growth of around three percent is largely attributed to the resurgence of services and goods exports.
The World Bank released the first quarter report of ‘Cambodia’s Economic Update’ (CEU) at Raffles Hotel Le Royal Phnom Penh yesterday. Maryam Salim, World Bank Country Manager for Cambodia, presided over the event.
In her opening remarks, Salim emphasized that for Cambodia to sustain its economic growth, it must maintain macro-financial stability by restoring fiscal space and protecting its financial sector.
She added, “Cambodia can also enhance its competitiveness by improving the business environment, streamlining trade procedures at borders, ensuring a more reliable energy supply, and strengthening the education system.”
The CEU report titled ‘Cambodia’s Export Revival and Trade Shifts’ noted, “Economic growth is expected to improve slightly to 5.8 percent this year, up from 5.6 percent last year, and is projected to strengthen further to 6.1 percent in 2025 and 6.4 percent in 2026, driven by the revival of exports in garments, travel goods, and footwear, as well as tourism.”
Boost from Tourism and Exports
The first quarter of this year saw international tourist arrivals in Cambodia reach 84 percent of pre-pandemic levels. This rebound in tourism, alongside strong performance in the exports of garments, travel goods, and footwear, has played a crucial role in the economic recovery. Agricultural commodities have also shown remarkable resilience, further contributing to the positive outlook.
ASEAN’s Role in Cambodia’s Export Market
The Association of Southeast Asian Nations (ASEAN) has emerged as Cambodia’s second-largest export market, trailing only the United States. The increase in foreign investment in Cambodia’s manufacturing and agriculture sectors has significantly bolstered the nation’s economic recovery.
Strengthening Education for Sustainable Growth
A recent seminar highlighted the importance of strengthening Cambodia’s education system to support sustainable economic growth. Oung Borat, Secretary of State of the Ministry of Education, Youth, and Sport, chaired a panel discussion with Hiroyuki Hattori, Chief of Education of UNICEF Cambodia, and Dr. Leng Phirom, Technical Advisor to the Economic, Social, and Cultural Council of the Office of the Council of Ministers (OCM).
Key policy recommendations from the seminar included:
- Prioritizing spending on early childhood education and primary schooling.
- Enhancing teaching effectiveness through comprehensive teacher management.
- Ensuring equitable distribution of resources across regions and schools.
- Investing in interventions to mitigate learning losses due to Covid-19.
- Strengthening the capacity of education authorities for improved budget planning.
- Fostering partnerships among stakeholders.
Capitalizing on Comparative Advantages
Lor Vichet, Vice President of the Cambodia Chinese Commerce Association, emphasized the importance of maximizing Cambodia’s current comparative advantages as a Least Developed Country (LDC). “Cambodia must fully capitalize on our preferential trade status, which includes zero duties for certain exports to the European Union and the United States, before our eventual graduation from LDC status,” Vichet told Khmer Times.
He further highlighted the potential benefits of stronger trade ties with both the United States and China. By formulating timely and pragmatic trade strategies and fostering a more equitable business environment, Cambodia can ensure that all stakeholders benefit from these relationships.
Cambodia as a Preferred Investment Destination
Amidst ongoing trade volatility and rising geopolitical tensions in the region, Cambodia has become an attractive destination for foreign investors looking to expand their market presence. The nation’s favorable trade status and strategic economic policies make it a preferred choice for investors seeking stability and growth opportunities.
Conclusion
Cambodia’s projected economic growth over the next few years signals a positive outlook for the country’s future. With strong performance in tourism, exports, and foreign investment, coupled with strategic policy recommendations for education and trade, Cambodia is well-positioned to sustain its growth trajectory. As the nation continues to capitalize on its comparative advantages and foster a fair business environment, it stands to benefit immensely from its trade relationships and investment opportunities.
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