Logo of Phnom Penh Post newspaper Phnom Penh Post - Economic growth to shrink to 2.3% in 2020, ADB says

Economic growth to shrink to 2.3% in 2020, ADB says

Content image - Phnom Penh Post

Economic growth to shrink to 2.3% in 2020, ADB says

The Asian Development Bank (ABD) has slashed Cambodia’s 2020 gross domestic product (GDP) growth to 2.3 per cent from its initial 6.8 per cent forecast due to the slowdown in major economies and China and reduced access to export markets.

However, growth is projected to trend upwards to 5.7 per cent in 2021 if the pandemic ends and economic activities normalise, according to its annual publication Asian Development Outlook 2020 released today.

Inflation would likely remain low at around 2.1 per cent in 2020 and stay subdued next year, on the back of compressed fuel prices.

In a statement, ADB Cambodia country director Sunniya Durrani-Jamal said faced by unprecedented challenges posed by Covid-19, the government has taken the right steps to respond to the crisis.

“[This] includes providing wage support for garment workers, and tax and credit relief for businesses. The government has also created the fiscal space to minimise the economic impact of this crisis, especially on the most vulnerable people,” she added.

The publication highlighted that Cambodia’s services sector is expected to contract by 1.7 per cent in 2020, as tourism drops and growth in real estate slows.

Industry growth would slow to 6.5 per cent because of a deceleration in garment production for exports and slower growth in construction.

“The government [is also] committed to diversifying the non-banking financial sector and developing local capital markets to provide much-needed financing for diversified investment and growth,” the publication stated.

Durrani-Jamal said Cambodia’s focus should be on Covid-19 containment, without which the recovery of the tourism and services sectors will be difficult.

As such, she said the government could draw from a $6.5 billion Covid-19 response package to meet the immediate needs of its developing member countries to stimulate their economies and provide social protection.

In November, ADB, which is Cambodia’s largest multilateral donor, agreed to provide $1.5 billion in loans, grants and technical assistance for agriculture and natural resources management.

The financing arrangement made under its 2019-2023 country development strategy also covers improved urban and rural living conditions, renewable energy infrastructure, and education and skills development.

“The initiatives aim to improve access and quality of service for Cambodians, and the business and investment environment,” ADB said.

As of December 31, 2018, ADB extended $3.5 billion to Cambodia, a large portion of that was used for agriculture, natural resources and environment, followed by transport, and water and urban infrastructure and services.

MOST VIEWED

  • Municipal hall releases map detailing colour coded Covid risks by commune

    Phnom Penh municipal governor Khuong Sreng released an official map detailing the red, yellow and dark yellow zones within the city under the new lockdown orders for Phnom Penh announced on April 26. The designation of red, dark yellow and yellow corresponds to areas with high,

  • Inter-provincial travel ban lifted; Phnom Penh and Takmao not exempted

    The government on April 25 decided to lift the inter-provincial travel ban and the closure of tourist attractions across the country, effectively immediately. The travel ban and closures of all resorts were imposed on April 6 and 17 respectively in a bid to curb the spread of Covid-19,

  • Phnom Penh, Takmao lockdown extended for another week

    The government late on April 26 announced an extension of lockdown in Phnom Penh and adjacent Takmao town in Kandal province for another seven days – or longer if residents do not comply with Covid-19 preventive measures and the community outbreak does not subside – until May 5. According

  • Gov't mulls extension of Phnom Penh, Takmao lockdown

    The Inter-ministerial National Commission for the Control and Enforcement of Lockdown held a video conference meeting on April 25 to review a draft document on the extension of lockdown in Phnom Penh and adjacent Kandal province’s Takmao town. The meeting was chaired by Minister of

  • Phnom Penh unveils rules for post-lockdown transition

    The Phnom Penh Municipal Administration issued a set of detailed guidelines for the seven days to May 12 after the capital emerges from lockdown at the onset of May 6. In the 14-page document signed by municipal governor Khuong Sreng released on the evening of May 5, the

  • Gov’t issues guidelines as lockdown nears end

    The government has issued a five-page set of instructions to be enforced when the three-week lockdown of Phnom Penh and adjacent Takmao town in Kandal province ends on May 6. According to an announcement signed by Prime Minister Hun Sen on May 4, the instructions cover a