Logo of Phnom Penh Post newspaper Phnom Penh Post - World Bank expects Cambodian economy to grow higher this year

World Bank expects Cambodian economy to grow higher this year

Content image - Phnom Penh Post
World Bank Country Manager for Cambodia Inguna Dobraja said on Wednesday that Cambodia needs to develop its physical and human capital to attain higher income status in the long term. POST STAFF

World Bank expects Cambodian economy to grow higher this year

The World Bank on Wednesday released its latest edition of Cambodia’s economic outlook, expecting that the Kingdom’s economy will grow higher this year compared to last year.

The World Bank Cambodia Economic Update, a biannual report that provides up-to-date information on short- and medium-term macroeconomic developments, said Cambodia’s economic growth rate will reach 7.1 per cent this year.

The figure is slightly higher than the seven per cent recorded last year. The growth is driven primarily by domestic consumption and exports, which are largely supported by strong demand in the US and the EU.

Despite the positive outlook, World Bank economists warned of external risks, which include the potential withdrawal of Everything But Arms preferences for Cambodia, and the unpredictable spill-over effects of the US-China trade dispute.

Internally, risks related to the financial sector should also be considered as the Kingdom continues to grow with large exposure to the construction and real estate sectors.

“Priorities for Cambodia include safeguarding the health of the financial sector, while building reserves, strengthening competitiveness, and preventing a rapid real exchange rate appreciation, given the recent surge in imports,” said World Bank senior economist for Cambodia Sodeth Ly.

The World Bank in 2016 revised the status of Cambodia’s economy, moving it up a rung from the low-income bracket into lower-middle income territory after its 2015 gross national income (GNI) per capita surpassed the $1,026 threshold to reach $1,070.

With economic growth averaging seven per cent annually, the Cambodian government expects the country to reach upper-middle-income status by 2030 and become a high-income nation in 2050.

To reach the next tier – the upper-middle income status – the Kingdom’s GNI per capita must reach $3,896, which is more than three times the current amount.

While long-term outlooks remain positive, World Bank Country Manager for Cambodia Inguna Dobraja said on Wednesday that Cambodia needs to develop its physical and human capital to attain higher income status in the long term.

“To achieve its upper middle-income country aspirations, Cambodia needs to increase its investment in human capital and infrastructure and adopt reforms that enable sustained and inclusive growth,” she said.

“Mobilising significant domestic savings to boost investment is critical to attaining what high-performing Asian economies have achieved.”

The World Bank report also calls for further bridging of the infrastructure deficit to absorb rising foreign direct investments in manufacturing and agro-processing, as well as continued improvements to the business environment.

MOST VIEWED

  • The hairy little heroes saving many lives in rural Cambodia

    IN RURAL Siem Reap province, rats dare to tread where no person will, as these hairy little heroes place their lives on the line each day for the good of the local community. The rodents are the most important members of a special team, leading

  • Hun Sen’s China visit ‘a good opportunity’

    Prime Minister Hun Sen’s visit to Beijing on Sunday to discuss economic and trade issues presents a good opportunity for the Kingdom to strengthen Chinese ties and counter punitive measures by the West, an analyst says. The prime minister’s four-day official visit to

  • Former chief bodyguard receives royal pardon

    The former chief bodyguard of late Senate president Chea Sim has received a royal pardon nearly eight years after he was sentenced to 15 years behind bars on several charges, according to a royal decree dated November 12, last year, and obtained by The Post on Wednesday.

  • PM warns EU and opposition on 34th anniversary of his rule

    HUN Sen reached the milestone of 34 years as Cambodian prime minister on Monday and used the groundbreaking ceremony for a new ring road around Phnom Penh to tell the international community that putting sanctions on the Kingdom meant killing the opposition. “Please don’t forget