Logo of Phnom Penh Post newspaper Phnom Penh Post - ADB sets GDP growth at 5.3%

ADB sets GDP growth at 5.3%

Content image - Phnom Penh Post
High-rise buildings in Phnom Penh. Heng Chivoan

ADB sets GDP growth at 5.3%

Gains in exports and increased foreign direct investment (FDI) are expected to drive gross domestic product (GDP) growth by 5.3 per cent this year and expand to 6.5 per cent in 2023, based on Asian Development Bank’s (ADB) latest prediction.

According to its 2022 Asian Development Outlook, industrial production will rise 8.1 per cent year-on-year in 2022 and 9.1 per cent next year, while the services sector will improve, coming in at 4.8 per cent in 2022 and 6.8 per cent in 2023.

The implementation of the strategy to develop Cambodia’s garment, footwear and travel goods sector will underpin growth as well as increase its competitive edge.

Goods and services exports are projected to grow in these two years, thanks to rising external demand for Cambodian products and the gradual recovery of the tourism sector.

“The reopening of the economy and the widespread vaccination against Covid-19 will lead to a gradual recovery of the tourism sector, which will support the demand for accommodation, food, transportation and other direct services,” the report read.

It, however, called for the diversification of the economy to ensure sustainable growth.

Speaking at the launch of the Asia-Pacific Development Outlook 2022 (ADO 2022) on April 6, Anthony Gill, ADB acting country director reiterated that Cambodia’s GDP growth for 2021 recovered to three per cent after contracting 3.1 per cent in 2020.

“The government has implemented policies to reduce the negative impact of Covid-19 on businesses and people’s incomes and support economic restoration. Extensive vaccination allowed Cambodia to reopen its borders for trade and tourism, leading to positive growth prospects for this year and 2023,” he said.

But, increasing trade and tourism alone would not be enough to help Cambodia sustain high economic growth.

“Cambodia, which focused on manufacturing and exporting garments, travel goods and footwear, could benefit from the diversification of light industries such as bicycles, spare parts, electronics and wiring products. This diversification will make the economy more resilient to crises of foreign demand,” he advised.

ADB is in the process of implementing an investment project worth $2.3 billion. The bank’s budget which will be allocated between 2022 and 2025 includes $1.44 billion in concessional loans and $37 million in grants to support economic development and recovery from the pandemic.

Meanwhile, Royal Academy of Cambodia economic researcher Ky Sereyvath forecasts that Cambodia’s economy might “grow slower” than ADB’s projection of 5.3 per cent this year.

His estimate puts GDP growth at around three per cent, based on current data and economic conditions, although they are subject to change.

He understood that ADB’s remarks were in relation to the increase in Cambodia’s exports in the garment sector and the implementation of free trade agreements (FTA) with China and South Korea on agricultural exports such as Pailin longan and mango.

“Japan also imports many products from Cambodia. Some domestic sectors will also grow, such as the retail sector,” he told The Post.

However, Sereyvath viewed that there are “still some sectors that continue to suffer” and face persistent challenges that are “difficult to recover from”, including the real estate sector and tourism.

“In particular, international tourism as other countries have not recovered yet from the Covid-19 crisis,” he said.

MOST VIEWED

  • Wing Bank opens new branch in front of Orkide The Royal along Street 2004

    Wing Bank celebrates first anniversary as commercial bank with launch of brand-new branch. One year since officially launching with a commercial banking licence, Wing Bank on March 14 launched a new branch in front of Orkide The Royal along Street 2004. The launch was presided over by

  • Girl from Stung Meanchey dump now college grad living in Australia

    After finishing her foundational studies at Trinity College and earning a Bachelor’s degree from the University of Melbourne in 2022, Ron Sophy, a girl who once lived at the Stung Meanchey garbage dump and scavenged for things to sell, is now working at a private

  • Ministry using ChatGPT AI to ‘ease workload’; Khmer version planned

    The Digital Government Committee is planning to make a Khmer language version of popular artificial intelligence (AI) technology ChatGPT available to the public in the near future, following extensive testing. On March 9, the Ministry of Post and Telecommunications revealed that it has been using the

  • Rare plant fetches high prices from Thai, Chinese

    Many types of plants found in Cambodia are used as traditional herbs to treat various diseases, such as giloy or guduchi (Tinospora cordifolia) or aromatic/sand ginger (Kaempferia galangal) or rough cocklebur (Xanthium Strumartium). There is also a plant called coral, which is rarely grown

  • Cambodia returns 15M Covid jabs to China

    Prime Minister Hun Sen said Cambodia will return 15 million doses of Covid-19 vaccines to China for donation to other countries. The vaccines in question were ordered but had not yet arrived in Cambodia. While presiding over the Ministry of Health’s annual meeting held on

  • Wat Phnom hornbills attract tourists, locals

    Thanks to the arrival of a friendly flock of great hornbills, Hour Rithy, a former aviculturist – or raiser of birds – in Kratie province turned Phnom Penh tuk tuk driver, has seen a partial return to his former profession. He has become something of a guide