World Bank projects Cambodia's 2022 growth at 4.5%

During the first quarter (Q1) of this year, goods exports rose to $4.8 billion, up by 26 per cent from last year. Traditional growth drivers, especially garments, travel goods, and footwear continue to expand but newer manufacturing industries, such as for electrical and vehicle parts, are also emerging. The World Bank report noted that the exports to the United States have been surging.

Although domestic economic momentum is strong, recovery is held back by deteriorating global demand, it cautioned. Rising global energy and food prices are fueling higher inflation, it pointed out.

In Cambodia, poor and vulnerable households with limited savings are likely to bear the brunt of the oil price shock, it said. The fiscal deficit is expected to widen to 6.3 per cent of gross domestic product as the government will need to continue spending programmes to support the poor, the report indicated.

The report said that over the medium term, the economy is expected to grow at around 6 per cent annually, with the new investment law, together with free trade agreements, helping to boost investment and trade.

The report recommended policies that can help sustain economic recovery. These included continued efforts to contain the COVID-19 infection, strengthening consumer and investor confidence, promotion of exports, particularly in agricultural commodities, by facilitating trade and reducing the costs of doing business, and stabilisation of retail prices.

The report also included a special focus section on post-pandemic supply chain disruptions. It suggested strategies for reducing logistic costs and emphasised that efforts to increase Cambodia’s trade competitiveness and enhance its connectivity would require a systematic approach that goes beyond the improvement of physical assets.

Efforts are needed to strengthen the entire supply chain by monitoring the efficiency of trade gateways and routes, expanding the ‘Best Trader scheme’ to the wider logistics sector, developing a longer-term business plan for railways, and establishing the ‘Roadwatch’, hotline, through which traders and citizens can report irregularities.

Implementing these reforms will require an institutional approach and a lead government agency that can oversee logistics development at the national and gateway levels, it added.

Fibre2Fashion News Desk (DS)