Logo of Phnom Penh Post newspaper Phnom Penh Post - Nearing lower-middle income

Nearing lower-middle income

People look through a household goods store in Phnom Penh’s Aeon Mall last year.
People look through a household goods store in Phnom Penh’s Aeon Mall last year. Hong Menea

Nearing lower-middle income

Cambodia is expected to reach a GDP per capita of $1,220 this year, putting it on course to being a lower-middle income economy, said Commerce Minister Sun Chanthol, who was attending a meeting with Macau entrepreneurs in Phnom Penh yesterday.

Based on a Ministry of Economy and Finance projection, the figure will be a jump from the 2014 estimate that put the GDP per capita at $1,123 for last year.

Srey Chanthy, an independent economic analyst, said given Cambodia’s growth trajectory for the first half of this year – in particular agricultural and garment exports, tourism and construction – this projection “might be realistic”.

According to Chanthy, as long as income growth outpaced inflation the country could graduate to lower-middle income status soon.

“Cambodia will still receive good treatment in terms of trading arrangements, but it may see reduced grants from donors,” Chanthy said.

“Of course, it will be able to continue borrowing soft loans.”

Despite big improvements in alleviating poverty, latest figures show that Cambodia still has 17.7 per cent of its population below the 2012 poverty line of $1.20 per person per day, according to the World Bank.

In order to make this growth inclusive, Grant Knuckey, CEO of ANZ Royal Bank, said a skilled workforce will be needed to sustain development and not just “simply construction and consumption, which are big drivers currently”.

“Inclusive growth at this stage of Cambodia’s development is really about education and skills development rather than classic redistribution of wealth,” he added.

While Chanthol referenced GDP per capita estimates, the World Bank bases a country’s income status on the gross national income (GNI) per capita, which is a nation’s total income divided by its population.

In its forecast for 2015, it projected that Cambodia’s GNI per capita will be $1,096 making it a low-middle income economy, above the bank’s threshold of $1,045 per capita.

The outlook went on to say that this graduation will result in fewer grants and will require an enhanced use of loans with “a focus on quality monitoring for greater development impact”.

Keat Chhon, permanent deputy prime minister, said Cambodia was set to become a middle income country by 2030, and policies, like the Industrial Development Policy, will propel the country high-income status by 2050.

“The Industrial Development Policy is the main framework in creating value added into products of Cambodia, to make the sustainability of industry development by connecting of the supply chain in the region and the world as well as to mainly focus on development of agro-agriculture,” he said.

In its Cambodia Economic Update, the World Bank estimated that the Kingdom’s projected GDP growth will fall slightly to 6.9 per cent in 2015 from the 7 per cent it was estimated to grow in 2014.

MOST VIEWED

  • School reopening to be postponed until November

    Minister of Education Hang Chuon Naron on Tuesday wrote to Prime Minister Hun Sen requesting a delay of school reopening across the Kingdom until November, when the new academic year begins. In his letter, Chuon Naron said the postponement is warranted to avoid the new

  • Foreigners in Kingdom must now register in FPCS system

    The Ministry of Interior’s General Department of Immigration (GDI) announced that it would not grant visa extensions to foreigners staying in Cambodia if their names are not listed on the Foreigners Present in Cambodia System (FPCS) by July 1. Foreign nationals can register in the

  • Covid-19 at ‘alarming rate’, health ministry says

    The Covid-19 risk level for individual transmission is at an “alarming rate” in the Kingdom and its probability is “not low”, warned Health Ministry spokesperson Or Vandine. “Cambodia’s coronavirus scenario is classified as being at an early stage of the pandemic because of ongoing

  • Mandatory quarantine for 30,000 workers begins

    Some of the roughly 30,000 workers from factories and enterprises across the Kingdom who went on leave during Khmer New Year began their government-imposed 14-day quarantine on Monday. Speaking at a press conference while visiting workers at the Phnom Penh Special Economic Zone on Monday, Ministry

  • Unemployed to get $40 per month

    The Ministry of Labour and Vocational Training has instructed enterprises, business owners and travel agencies in five provinces to prepare the proper forms for the suspension of employment contracts. This, it said, will make it easier for the ministry to transfer $40 a month to workers

  • Gov’t travel ban flouted

    While the majority of Cambodians have paid heed to Prime Minister Hun Sen’s order to stay put and not travel during the Khmer New Year – the holidays of which were also postponed – several hundred have left Phnom Penh nonetheless. They have allegedly breached provincial

  • G20 energy ministers struggle to finalise oil output cuts

    Top oil producers struggled to finalise production cuts during a virtual summit held by Group of 20 (G20) energy ministers on Friday, despite US President Donald Trump’s mediation efforts to end a standoff with Mexico. The final G20 communique appeared to gloss over simmering divisions

  • Kingdom revises travel restriction order

    The government on Friday eased the district and provincial border restrictions issued on Thursday. People are now allowed to cross districts within their provinces. Phnom Penh and Kandal province are to be treated as a single region where people are allowed to travel freely. In

  • Private schools struggling

    The Cambodian Higher Education Association has claimed that 113 private educational establishments are facing bankruptcy because of their inability to pay rent and staff salaries in light of nationwide school closures caused by the Covid-19 outbreak. It said the financial trouble started when the Ministry of

  • Khmer New Year holidays postponed

    In an effort to halt Covid-19 infections in the Kingdom, Prime Minister Hun Sen has postponed the Khmer New Year holidays scheduled from April 13 to 16. While the people will not have their usual break, nor will there be any public celebrations or gatherings at pagodas,