The International Monetary Fund (IMF) on December 18 reaffirmed the five-per-cent 2022 real GDP (gross domestic product) growth forecast for Cambodia that it made in September, despite fresh rounds of downward pressure brought by undergoing geopolitical conflicts and Covid-19-related woes.

This was revealed in a press release issued by the Washington-based multilateral lender in conjunction with the conclusion of its executive board’s 2022 Article IV consultation with the Kingdom.

“Despite the new pressures, the recovery is projected to continue. Real GDP growth is forecast to be five per cent in 2022, after the strong export performance earlier in the year, and nearly five-and-a-half per cent in 2023, supported by the continued recovery of tourism and ongoing policy support, although dampened by external pressures and the impact of rising prices on real disposal income,” the IMF said.

For reference, IMF data on December 19 showed the 2021 nominal GDP for Cambodia at $26.313 billion, whereas the World Bank (WB) cited $26.961 billion.

“Uncertainty around the outlook is particularly high, and risks are tilted to the downside. The most pressing risks are from rising private debt; conditions in key large economies; and inflation,” the release continued, adding: “Inflation is expected to peak this year, be lower in 2023, and decline further thereafter, assuming it remains mostly confined to imported goods.

“[Our] executive directors welcomed Cambodia’s strong economic recovery from the pandemic supported by the country’s strong economic buffers and robust crisis response. Directors agreed that the growth outlook is broadly favourable, notwithstanding downside risks from slower external demand and rising domestic vulnerabilities including elevated levels of private debt,” the IMF added.

In a December 7 statement, the WB also affirmed that it had maintained its 2022 economic growth forecast for Cambodia issued in September, at 4.8 per cent, highlighting the Kingdom’s remarkable post-Covid-19 economic recovery. But, the bank warned, global headwinds expected in the coming months could undermine its outlook.

Speaking in the statement, Mariam Sherman, WB country director for Cambodia, Laos and Myanmar, recommended the Kingdom take action to bolster its tourism industry and broader economy, as well as consolidate its fiscal position, to brace for potential external demand shocks.

“Revenues are up, thanks to the economic recovery and administration improvements,” Sherman said. “Broadening the tax base will help ensure the resources needed to promote Cambodia’s economy and weather slowing growth among major trading partners. Tourism and hospitality are particularly promising areas for growth.”

The statement added that Cambodian economic growth is projected to improve to 5.2 per cent next year “as increased hiring supports rising domestic consumption and as inflation recedes.

Similarly in its press release, the IMF recommended authorities “calibrate fiscal policy to help support vulnerable households, without compromising price stability, while also taking steps to address financial sector risks and corruption vulnerabilities”, and advised the National Bank of Cambodia – the central bank – “to rein in credit growth by gradually restoring monetary conditions to pre-crisis levels”.