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ADB revises down Cambodia's growth forecast, sees rebound in 2022

23 Sep '21
3 min read
Pic: Shutterstock
Pic: Shutterstock

Cambodia’s economy is projected to grow by 1.9 per cent this year amid the prolonged COVID-19 pandemic, but a rebound of 5.5 per cent is expected next year, according to a new update from the Asian Development Bank (ADB). “The protracted pandemic has hurt services and domestic demand,” said ADB country director for Cambodia Sunniya Durrani-Jamal.

“Lockdowns and temporary factory closures hit production in the garments, travel goods, and footwear sector earlier this year. Taking this into account, we now project Cambodia’s economic growth to be 1.9 per cent in 2021, down from our April forecast of 4.0 per cent.”

The exports of garments, travel goods, and footwear sector (GTF) were well below pre-pandemic levels in the first half of 2021, albeit higher than in 2020. Other manufacturing has continued to thrive. Growth in industry is now projected at 5.3 per cent in 2021, subject to accelerating GTF exports and persistent strength in other manufacturing.

According to the Asian Development Outlook Update (ADOU) 2021, the agriculture sector is expected to grow by 1.5 per cent in the country. Domestic coronavirus outbreaks had disrupted agricultural supply chains, but the overall impact was limited. Agricultural exports rose 30.3 per cent year on year in the first half of 2021, with solid growth of non-rice exports.

Domestic demand for food, accommodation, transportation, and other in-person services has been severely limited by the COVID-19 outbreak and lockdowns. Restrictions on international travel remain, and international visitor arrivals were down by 91.3 per cent year on year in the first half of 2021. Growth in services output is projected at minus 0.6 per cent for 2021, the report said.

The government has taken steps to mitigate the pandemic’s economic and social impacts. Those measures included free COVID-19 vaccines and treatment, cash transfers to poor households, economic stimulus, and loan restructuring programmes.

“To increase people’s wellbeing and sustain growth the government will need to continue strengthening its social protection systems and improve the quality of healthcare and education.  Steady reforms are also needed to attract investment for high quality infrastructure, including digital infrastructure. Enacting reforms to enhance the performance of the civil service, is also fundamental to improving the country’s international competitiveness,” Durrani-Jamal was quoted as saying in an ADB press release.    

Currently, ADB is implementing investment projects worth $2.08 billion in Cambodia. In 2020, ADB provided $477.2 million in sovereign loans and grants to Cambodia and catalysed an additional $281.3 million through co-financing.

ADB’s lending pipeline for 2021-2024 includes $1.49 billion in concessional lending and $31.8 million in grants to support the country’s economic development and recovery from the COVID-19 pandemic.

Fibre2Fashion News Desk (DS)

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