IMF Lowers Growth Forecast for Cambodia Due to Weak External Demand

Workers leave a garment factory for lunch in Phnom Penh, Cambodia on Sept. 21, 2022. Photo by Phearum/Xinhua

PHNOM PENH — The International Monetary Fund (IMF) on Wednesday lowered its 2023 economic growth forecast for Cambodia to 5.6 percent from its April prediction of 5.8 percent, mainly due to weak external demand.

"Cambodia is very exposed to the U.S. and European markets, and demand there is weaker," Shanaka Peiris, division chief of regional studies at the IMF's Asia and Pacific Department, said in an online press conference on the Regional Economic Outlook for Asia and Pacific.

The Southeast Asian nation's economy traditionally relies on garment, footwear and travel goods exports, tourism, agriculture, real estate and construction.

The kingdom exported 8.14 billion U.S. dollars worth of garments, footwear and travel products to international markets in the first nine months of 2023, a year-on-year decrease of 17.8 percent, according to a Ministry of Commerce's report.

Meanwhile, Peiris said the Regional Comprehensive Economic Partnership (RCEP) agreement has helped diversify Cambodia's economy and exports, reducing the country's reliance on exports to the United States and Europe.

He said Cambodia will benefit from this mega-regional trade pact for the long term.

Entered into force in 2022, the RCEP agreement comprises 15 Asia-Pacific countries, including 10 ASEAN member states -- Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam -- and their five trading partners, namely China, Japan, South Korea, Australia and New Zealand.

According to Peiris, Cambodia's growth is predicted at 6.1 percent in 2024.

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