Logo of Phnom Penh Post newspaper Phnom Penh Post - Gov’t lowers 2023 growth forecast from 6.6% to 5.6%

Gov’t lowers 2023 growth forecast from 6.6% to 5.6%

Content image - Phnom Penh Post
Aerial view of Phnom Penh. Hong Menea

Gov’t lowers 2023 growth forecast from 6.6% to 5.6%

The government has revised down its 2023 growth forecast for the Cambodian economy to 5.6 per cent versus the 6.6 per cent it put forth in October, citing uncertainty about global economic growth tied to the Ukraine conflict, climate change and the Covid-19 crisis.

This was revealed by Ministry of Economy and Finance permanent secretary of state Vongsey Vissoth at a January 25 public forum on macroeconomic management and the 2023 budget law.

Although fallout from Covid-19 has subsided, the Ukraine crisis and climate change will put significant downward pressure on global economic growth, with the US, EU, China and other major buyers of Cambodian goods facing particularly grim prospects, he stated.

The latest growth forecast figure – which Vissoth affirmed had been personally approved by Prime Minister Hun Sen – is considerably greater than the 2.7-per-cent growth rate estimated for the global economy, he noted.

He argued that the Kingdom’s economic growth is underpinned by the increasing diversity in its export mix, with textile-related items accounting for a considerably smaller share than before.

“To deal with these difficulties, we must minimise the negative impact, and seize opportunities for progress, because every crisis represents an opportunity,” he stressed.

Vissoth remarked that ASEAN as a whole could achieve better economic growth this year than the global average as geopolitical conflicts among major powers shift more attention and investment to the Southeast Asian bloc’s member states.

According to the finance ministry’s “Cambodia’s Macroeconomic Situation at a Glance 2022-2023” report, growth in export sectors, especially the garment sector, is pegged to decelerate to 5.5 per cent this year, due to weaker external demand, particularly from the EU market.

It predicted 11.7 per cent growth in the non-garment manufacturing sector, driven by food and beverages for the domestic market as well as furniture, solar items and electronic components for export.

Wholesale-and-retail trade, construction, real estate, and agriculture are expected to grow by 6.5 per cent, 1.1 per cent, 1.2 per cent, 1.1 per cent, respectively, it said, adding that the “tourism sector – hotel and restaurants – is expected to continue rising with the growth of 32.7 per cent” as regional and international travel picks up.

The year-on-year consumer price inflation is anticipated to slow down to around 3.2 per cent in 2023, as oil and other commodity prices gradually return to normal levels, it added.

However, the ministry warned that the economic outlook faces several downside risks, listing six potential threats, including “the rise of regional and global geopolitical tensions” and “further global economic slowdown”.

The third risk was two-fold: “the tightening of monetary policy longer than [expected], especially the US”, along with “the appreciation of US currency”, which the report said “could affect the flow of investment and trade”.

The remaining three were: “the rise of debt tension, particularly in emerging [market] economies”; “the fragmentation of [the] global economy”, which the report said could “affect international cooperation”; and “climate change and natural disaster[s]”.

Cambodia Chamber of Commerce (CCC) vice-president Lim Heng previously commented to The Post that Cambodia’s economic growth would improve in 2023, powered by its “Living with Covid” policy, a steady flow of tourists, and an uptick in investments that he attributed to the Kingdom’s free trade agreements (FTA) as well as government initiatives to grow the domestic production capacity.

And in a December 7 statement, the World Bank forecast Cambodia’s economic growth at 5.2 per cent for 2023, “as increased hiring supports rising domestic consumption and as inflation recedes”.

MOST VIEWED

  • Research key to Kanitha’s rep for expertise

    Sok Kanitha is used to weighing in on controversial issues using a confident approach that signals expertise and authority, and a recent video she made was no exception. Her “Episode 342: The History of NATO” video went live on January 16, 2023 and immediately shot to 30,000 likes and 3,500

  • Cambodia maintains 'Kun Khmer' stance despite Thailand’s boycott threat

    Cambodia has taken the position that it will use the term "Kun Khmer" to refer to the sport of kickboxing at the upcoming Southeast Asian (SEA) Games, and has removed the term Muay from all references to the sport. Despite strong reactions from the Thai

  • Knockout! Kun Khmer replaces ‘Muay’ for Phnom Penh Games

    Cambodia has decided to officially remove the word Muay from the programme of the 32nd Southeast Asian (SEA) Games 2023 in May. “Kun Khmer” will instead be used to represent the Southeast Asian sport of kickboxing, in accordance with the wishes of the Cambodian people. Vath

  • Artificial insemination takes herd from 7 to 700

    Some farms breed local cows or even import bulls from a broad for the purpose of breeding heavier livestock for meat production. One Tbong Khnum farmer has found a more efficient way. Hout Leang employs artificial insemination to fertilise local cows. Thanks to imported “straws”

  • New int’l airport nearly half complete as travel industry returns to life

    Construction of a new airport that is slated to serve the capital has passed the 43 per cent completion mark, raising prospects for a proper recovery in the civil aviation and tourism sectors as international travellers return to the Kingdom in increasingly large numbers. The figure

  • Chinese group tours return to Cambodia starting Feb 6

    Cambodia is among 20 countries selected by Beijing for a pilot programme allowing travel agencies to provide international group tours as well as flight and hotel packages to Chinese citizens, following a three-year ban. As the days tick down until the programme kicks off on February 6,