Cambodia's economy to rise 5.8% in 2024: ADB report

The Cambodian economy is expected to build on its 5 per cent growth in 2023, spurred by sustained activity in manufacturing outside the garment, footwear, and travel goods (GFT) sector. The forecast economic expansion over the next two years is set to be bolstered by a surge in export-oriented manufacturing, as per the Asian Development Outlook (ADO) April 2024 report.

The report also highlights an anticipated stability in inflation rates, which are expected to remain low at around 2.0 per cent over the next two years, following a 2.1 per cent average in 2023. This comes after a period of falling global energy prices which contributed to the lower inflation environment.

Amidst this growth, the Cambodian government is planning gradual fiscal consolidation beginning in 2024, aiming to replenish reserves depleted during the pandemic. However, the ADB warns of potential challenges that could affect the long-term economic outlook, including the possibility of global economic downturns, rising levels of private debt, volatile energy prices, and climate vulnerabilities.

The ADO report also touches on Cambodia's strategic plans for its anticipated graduation from the United Nations' least-developed country (LDC) category in 2027. While this graduation is expected to enhance Cambodia's international standing and attract more investment, it also presents hurdles such as diminished access to concessional financing and preferential trade benefits. These have been crucial in driving sectors that significantly contribute to Cambodia's growth and employment.

To successfully manage this transition, the ADB emphasises the importance of Cambodia enhancing its integration into the global economy, diversifying its markets, focusing on higher value-added products, and investing in sustainable infrastructure and human capital. Strengthening domestic resource mobilisation is also highlighted as a key strategy for sustaining growth and navigating the challenges of LDC graduation.

"Despite global economic challenges, Cambodia’s economy performed well in 2023,” said ADB country director for Cambodia, Jyotsana Varma. “We expect growth to be robust in 2024-2025, with the garments, footwear, and travel goods (GFT) sector poised for a significant upturn building on the positive momentum during the last quarter of 2023.”

Fibre2Fashion News Desk (DP)