Cambodia's GDP expected to grow at 5% in 2022: NBC report

The country’s gross domestic product (GDP) growth in 2022 will be primarily supported by agricultural exports, transport, telecommunications and improved investment flows and remittances from overseas workers.

In terms of trade and investment, the country is expected to benefit from the Regional Comprehensive Economic Partnership (RCEP) agreement, bilateral free trade agreements and the introduction of new investment law, it said.

The report also highlighted the uncertain conditions created by the pandemic, the Russia-Ukraine war and interest rate hikes in developed countries as threats to the economy.

Though Cambodia has only limited macroeconomic linkages to the Russia-Ukraine region, the prolonging and escalating war can cause severe damage to the world economy, especially the European Union which is one of Cambodia’s main export destinations.

“The crisis has weighed on the global and regional economic recovery through the rise in international commodity prices, putting upward pressure on the currently high inflation in many countries. As Cambodia imports several food items and oil from abroad, inflation may be much higher than the previous year which would put pressure on households’ purchasing power,” the report said.

Second, China’s economic slowdown due to its strict COVID-19 strategy has led to more frequent lockdowns and retrenchment of China’s real estate sector which may affect the economic recovery of Cambodia that heavily depends on Chinese investments and imported materials for the Kingdom’s export-oriented industries.

Third, the tightening of the global financial conditions as a result of persistent and soaring inflation since the second half of 2021 may affect the flow of capital into the emerging and developing countries, decelerating the economic momentum in the region as well as in Cambodia.

Fourth, though the infection rate from the omicron variant of the virus was low in Cambodia, the threat of the emergence of new variants still remains. The continued spread of omicron in the region has also spillover effects on the Cambodian economy through a decline in remittances, tourism, investments and export channels.

Fifth, climate change poses a significant risk to the country’s agricultural production, which is vulnerable to extreme weather events.

The report shows the country’s manufacturing sector bounced back in 2021 following improved external demand. Exports of garments (65.1 per cent of the total exports) rose by 15.4 per cent, while exports of non-garment items (excluding gold) climbed by 42 per cent, particularly bicycles, electrical parts and agricultural products.

Fibre2Fashion News Desk (DS)