The government is evaluating the current economic situation and monitoring the impact of the ongoing Covid-19 pandemic to determine whether to adjust its six per cent projection for economic growth this year, Ministry of Economy and Finance spokesman Meas Sok Sensan said on Wednesday.
The World Bank adjusted its projection of the Kingdom’s 2020 economic growth to 2.5 per cent from its earlier “slightly below seven per cent” prediction, it said, in a report released on Tuesday.
However, the bank expects growth to rebound to 5.9 per cent next year under the baseline scenario.
The tourism sector has been the hardest hit by the outbreak while the garment industry currently faces a global demand shock as well as the partial withdrawal of the EU’s “Everything But Arms” trade preferential scheme.
The report said: “Spillovers to the construction and real estate sector – one of Cambodia’s major growth drivers – amid financial market turmoil could potentially be detrimental to growth.
“Rebounds in economic activity in China and major markets in 2021 improves Cambodia’s growth outlook for next year,” it said.
Sok Sensan told The Post on Wednesday that the government has neither refuted nor accepted the World Bank’s updated projection and will maintain its six per cent projection for now.
“The government has not yet completed its assessment of the [outbreak’s] impact on the economy. We are monitoring all aspects before we re-evaluate [our figures].
“We will continue to monitor the impact of the Covid-19 pandemic for the time being before we make adjustments,” he said.
Canadia Bank Plc CEO Raymond Sia said no country will be spared from the shock of the crisis. “Cambodia possesses an open-market economy and will also be impacted.
“However, we believe that the measures put in place by the government and the National Bank of Cambodia will mitigate the negative impact and also provide some welcome relief to both customers and financial institutions during this challenging period,” said Sia.
Early last month, Prime Minister Hun Sen said the government had allocated between $800 million and $2 billion to mitigate the adverse economic effects of Covid-19.
The allocation of funds was based on two scenarios – $800 million for six months and the full $2 billion if the pandemic lasts longer than a year.
On Tuesday, the government issued a second stimulus package – a three-month minimum tax exemption for the aviation sector and an exemption on all types of monthly taxes for tourism operators.
The minimum 10 per cent tax exemption applies from March to May for airlines operating in Cambodia.
Meanwhile, the government also expanded the scope of its 20 per cent sponsored contribution mechanism to workers and employees affected by the suspension of operations in the tourism sector.
On February 24, Prime Minister Hun Sen announced that all workers employed by suspended factories should receive at least 60 per cent of the minimum wage.
Employers would be required to pay 40 per cent while the government would provide the other 20 per cent.
Sok Sensan said: “On Tuesday when the government announced its stimulus package, it pointed out that we don’t have much to worry about as it will boost the economy.”