- March 1, 2021 4:29 AM
- February 1, 2022 7:34 PM
- February 22, 2023 9:52 PM
Trade deals help fuel revival
PHNOM PENH – Cambodia’s economy is expected to grow by 3 to 4 percent this year and next, Royal Academy of Cambodia economic researcher Ky Sereyvath says.
The figure is lower than an Asian Development Bank (ADB) prediction of 5.3 percent this year and 6.5 percent in 2023.
Sereyvath said he presumed that the economy would grow due to increased agricultural exports.
This might be supported by factors, such as free trade agreements with China and South Korea, the Regional Comprehensive Economic Partnership (RCEP) and because Cambodia is the chair of ASEAN this year which creates value and interest from other countries.
Non-garment manufactured exports would also increase. Cambodia may have opportunities in this sector due to the government’s policy to select vaccines and increase herd immunity and resilience to COVID-19, which keeps factories running while other countries are closed.
His growth forecasts were based on current data and economic conditions, and particularly with the uncertainty of COVID-19.
“To accelerate our economic growth, we have to opt for diversification of the manufacturing industry because we cannot be a garment export-oriented country for life," he said.
"The manufacturing sector requires the development of advanced technology and professional skills. Thus, the government should promote stronger vocational training to respond to the needs or requirements of industrial diversification.”
While tourism is still a challenge, we prioritize industry over-tourism. But tourism will become an important sector as the world puts an end to the COVID-19 pandemic and more importantly, it is a non-mechanized industry that can gain more revenue than any other sector, he said.
According to the 2022 ADB’s Asian Development Outlook, gains in exports and foreign direct investment inflows are projected to contribute strongly to GDP growth.
“Industry output is expected to grow by 8.1 percent in 2022 and 9.1 percent in 2023, while the services sector is projected to rebound to 4.8 percent this year and rise to 6.8 percent next year, demonstrating a rebound in the hotel and restaurant sector,” it noted.
The report pointed to the growth of non-garment manufacturing, reflecting strong external demand aided by free trade agreements with China, Korea and new investment law. Meanwhile, agriculture output is anticipated to see significant growth at 1.2 percent.
The government has implemented policies to minimize the negative impact of COVID-19 on businesses and people’s incomes and to support economic recovery.
Positive economic prospects for this year and next year will be enabled as a result of high levels of vaccination coverage and reopening of borders, trade and tourism sector, said ADB acting country director Anthony Gill.
Increasing trade and tourism alone would not be enough to help Cambodia sustain high economic growth, he said.
“Cambodia, which has traditionally focused on producing and exporting garments, travel goods and footwear, can benefit from diversification into light manufacturing such as bicycles, electronic components and wiring products.
“The diversification will make the economy more resilient to external demand shocks,” he said.