Cambodia’s real GDP growth is projected to reach 2.2% this year, impeded by slow growth in services including tourism, and in construction, and real estate. While, other traditional growth drivers, especially the garment, travel goods, footwear, and bicycle manufacturing industries, as well as agriculture, are underpinning the economic recovery, according to the World Bank’s latest Economic Update for Cambodia.
Despite recovery in manufacturing exports and expansion of agricultural commodity exports, the trade deficit has widened significantly. This was caused by rising imports of a few items, especially gold, used for savings.
“As we all know, Cambodia is now living with COVID-19 and very large number of populations have been vaccinated and the government began reopening the country for business, while continuing to enforce protective health measures,” said Maryam Salim, World Bank Country Manager for Cambodia.
“At the World Bank, we are preparing a Performance and Learning Review that will allow us to further strengthen and align our partnership with Cambodia as the country strives to achieve a resilient recovery from the impact of the COVID-19 pandemic.”
Cambodia’s growth outlook is expected to continue to recover as COVID-19-related restrictions are lifted. Growth is projected to reach 4.5% in 2022, but any renewed spread of the virus could put the recovery at risk.
To jump start the economic recovery, the report recommends key reforms areas, including, clear rules and regulations on living with COVID-19 under the “new normal”, regulatory and fiscal measures that support revival in the tourism sector, and prompt introduction of regulations to implement the new investment law. It also says as the economic recovery takes shape, Cambodia can then start rebuilding its fiscal space and continue to monitor asset quality and improve confidence in the banking system.
The report also includes a Special Focus section looking at the impact of the COVID-19 on learning and earning. It found that school closures caused a large loss of learning in the country.
Despite the wide variety of remote learning programs on offer by the Ministry of Education, Youth and Sport, some students still could not or did not use them. Students who missed out, or worse dropped out, will earn less in their lifetimes than they otherwise would have. The learning loss attributable to school closures during the pandemic will have huge economic ramifications, reducing the current cohort’s expected annual incomes by US$738 per person in purchasing power parity terms.
In this regard, it is recommended that Cambodia needs to further invest in human capital, acting quickly to prevent dropouts, assessing student learning, and implementing new techniques for learning recovery to get students back on track.