The government maintained its projection that the Cambodian economy would contract around 1.9 per cent this year and rebound next year to 3.5 per cent growth, according to the minutes of the Council of Ministers Plenary Session released on Friday.
This scenario would put the Kingdom’s 2021 gross domestic product (GDP) at 117.939 trillion riel, equivalent to roughly $29.013 billion, and GDP per capita to the tune of $1,771, up from the $1,683 expected in 2020, according to the minutes.
On October 13, the International Monetary Fund (IMF) projected a 2.8 per cent contraction in the Kingdom’s economy this year, and a sharp rebound next year to 6.8 per cent growth.
Jonathan D Ostry, the acting director of the IMF’s Asia and Pacific Department, told The Post on October 21 that the government should prioritise its spending on vulnerable sectors in order to boost economic activity and create more jobs during these trying times.
“In terms of the policy imperatives, I think, again, what we have advised is a careful prioritisation of expenditure to make sure that fiscal resources reach those who are most vulnerable, those at the bottom of the income scale, those in the informal sectors and so forth whose employment opportunities may have been hit really badly.
“With the sort of baseline recovery in global demand for some of Cambodia’s main exports like garments, and some recovery in tourism, it should be possible for the recovery that we envisage for 2021 to materialise,” he said.
Government spokesman Phay Siphan said the industrial sector is expected to shrink 2.2 per cent this year and bounce back to 4.1 per cent growth next year.
Growth in the services sector is projected to jump to 3.6 per cent next year from a 3.0 per cent contraction this year, while agriculture is expected to grow 0.9 per cent this year and 1.6 per cent next year, he said.
“Against the backdrop of increasing uncertainty domestically and abroad, it is paramount [for the government] to continue [its] battle against Covid-19 as well as maintain business activity and people’s livelihoods in order to ensure socio-economic stability and achieve 3.5 per cent economic growth [next year],” Siphan said.
Key measures in the government’s Covid-19 strategy include raising spending in the health sector and promoting public health promotion programmes, he said.
The government will also provide additional fiscal incentives and credit guarantee schemes to boost liquidity in the market so that businesses can continue to operate, he added.
“The continued stabilisation of people’s livelihoods can be achieved through the implementation of cash transfer, cash-for-work and short-term skills training programmes.
“This in turn will make it easier to start new businesses, find a job in a new field – or one with higher-level technical requirements, create new jobs to replace lost ones, stimulate business activity among small and medium-sized enterprises, and migrate jobs from areas that have been more severely hit by Covid-19 to other sectors,” Siphan said.
This year, the government expects inflation to be 2.8 per cent and 3.1 per cent in 2021 on the likelihood of a hike in oil price.
The Cambodian riel is expected to remain stable at 4,065 against the greenback, while the current account deficit is projected to contract slightly to 17.3 per cent of GDP.
International reserves grew to $19.5 billion as of June 30, up 3.7 per cent from $18.8 billion from December 31 last year, sufficient to finance 10 months of imports.