Cambodian Economy Steadily Recovering from Pandemic, Still Faces Challenges: IMF Official

Photo taken on May 24, 2018, shows high-rise buildings in Phnom Penh, Cambodia. Cambodia has seen rapid development in transport infrastructure, energy, trade, investment, construction and real estate, and tourism in the last five years, officials and experts said. Photo: Xinhua/Sovannara

PHNOM PENH -- The Cambodian economy continues to recover from the COVID-19 pandemic, but still faces domestic and external challenges, an International Monetary Fund (IMF) official said here on Tuesday.

Davide Furceri, the IMF mission chief for Cambodia, said the country's economy is projected to expand by 5.3 percent in 2023 and 6 percent in 2024, from 5.2 percent in 2022.

"The ongoing recovery in tourism and surging exports of solar panels and electrical components are the main growth drivers," he said in a press conference at the end of his two-week mission to Cambodia.

"Garment exports remain weak, showing only modest signs of recovery in recent months, and slower construction activity is also weighing on growth," he added.

Furceri said risks to the outlook stem from external challenges such as weaker-than-projected demand from advanced economies and tighter U.S. monetary policy as well as weakness in parts of the real estate sector.

He said that despite a small projected increase in public debt to gross domestic product (GDP) over the medium term, risks of debt distress remain low in the Southeast Asian country.

He suggested that the kingdom focus on diversifying trade partners, investing in new growth drivers, and capitalizing on climate transition opportunities.

"The recent diversification of manufacturing into solar panels and electrical components is encouraging in this context," he said. "Enhancing public governance and transparency will be vital to attract more foreign direct investment and to ensure macroeconomic stability."

According to Furceri, the country's inflation is expected to average 2.3 percent in 2023 and around 3 percent in 2024.

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