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Global rebound to lift external sector: NBC

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Cambodian non-gold exports in the first five months of 2021 were worth $5.950 billion, up by 14.1 per cent year-on-year, while non-gold imports surged by 17 per cent to $8.664 billion, according to the Ministry of Economy and Finance. Hean Rangsey

Global rebound to lift external sector: NBC

The global economic recovery will be conducive to Cambodia's external sector – especially exports and investment, reinforcing its position as a pillar of support for relevant sectors, to boost the national economy into positive growth and sow the seeds of an eventual rebound in tourism, according to the central bank chief.

National Bank of Cambodia (NBC) governor Chea Chanto made the remark at a first-half review meeting on July 22, stressing that the prolonging Covid-19 pandemic clouds global economic recovery.

He said developed countries have continued to adopt fiscal and monetary stimulus measures and ramped up vaccination drives to support social welfare and economic activity.

However, he said, inequities in access to vaccines and issues in political space have led to an uneven economic recovery, with developed countries expected to recover faster than emerging and developing countries.

"The Cambodian economy, like the economies of developing countries, may also face a new wave of Covid-19, an increase in public and private debt, and an increase in inequality and poverty," Chanto said.

He stressed that the central bank would be ready to “contribute to the recovery and boost economic activity by launching the necessary support measures with prudence, graduality and predictability".

He said the government has “put in place strict and timely measures to prevent and reduce the spread of Covid-19 in the community and to implement a nationwide vaccination campaign as soon as possible.

“The step-by-step package of measures has helped mitigate the effects of the crisis and maintain business sustainability, especially in helping the poor, vulnerable people and priority sectors," he said.

Consistent with government policy, the NBC has implemented monetary stimulus packages and eased macro measures to meet the financing needs of the economy and alleviate the burden of Covid-hit cash strapped customers, he said.

The central bank has improved the cash flow of banking and financial institutions and enabled them to restructure their loans, he pointed out.

The International Monetary Fund (IMF) forecasts that global economic growth will grow by six per cent this year, from a 3.3 per cent contraction in 2020, the NBC noted in its first-half report.

The IMF expects the advanced economies to expand 5.1 per cent this year, and the emerging market and developing economies 6.7 per cent. It has also revised down its growth outlook for the ASEAN Plus Five economy to a 4.9 per cent expansion, due to the risk of new Covid-19 waves.

The World Bank anticipates that the Kingdom’s economy will grow four per cent this year, but indicated that the rate could fall below one per cent in the worst-case scenario, the NBC report added.

The NBC said: "The recovery of Cambodia's developed trading partners has had a positive impact on exports. However, due to the outbreak of Covid-19, both in the region and in Cambodia, key sectors of the Cambodian economy continue to decline, especially the tourism sector.”

The report noted that the number of international visitors to Cambodia fell by 87.8 per cent year-on-year in January-June, the value of gross domestic manufactured products dipped by about 37 per cent, and the construction sector also shrank.

On the other hand, the agricultural sector continued to make good progress, with the dry-season rice yield increasing by 12 per cent, it said.

The government has launched nine rounds of economic relief measures to offset some of the economic fallout on the textile, garment, footwear, travel goods and tourism sectors triggered by the Covid-19 pandemic, which is still evolving at an alarming rate, driven by new variants.

Ministry of Economy and Finance permanent secretary of state Vongsey Vissoth in March said Cambodia had allocated nearly $2 billion to stave off the spread of the novel coronavirus and to address the economic impact on poor families and key sectors.

Even so, the Kingdom’s trade balance recorded a surplus of $157 million in January-June, supported by a net inflow of financial accounts, according to the NBC report.

Gross international reserves stand at record-high $20.8 billion – providing more than 10 months of import cover, it said.

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