ADB: Cambodia's economy to rebound by 4 per cent in 2021, higher next year

According to the ADB report, industrial production is expected to rise 7.1 per cent in 2021 and 7 per cent in 2022. - AFP

PHNOM PENH (Xinhua): Cambodia's economy is forecast to grow 4 per cent in 2021 and 5.5 per cent in 2022, as the economic recovery in its major trading partners boosts demand for the kingdom's exports, an Asian Development Bank (ADB) report has said.

ADB country director for Cambodia Sunniya Durrani-Jamal said the Southeast Asian nation's economy contracted by 3.1 per cent in 2020 because of the Covid-19 pandemic.

"The government has responded quickly to the recent spike in cases, and we expect the economy to return to growth in 2021," she said in a press statement on Wednesday (April 28).

"This will help increase household incomes, but not all sectors and regions will benefit equally, so it will be essential to closely monitor household welfare and the need for additional support," she added.

According to the bank's report, industrial production is expected to rise 7.1 per cent in 2021 and 7 per cent in 2022 on the back of a rebound in the garments, footwear, and travel goods sector, as well as growth in other light manufacturing such as electronics and bicycles.

Agriculture is expected to grow by 1.3 per cent in 2021 and 1.2 per cent in 2022, underpinned by higher crop production after last year's flood damage, continued growth in aquaculture, and rising agriculture exports to China, it said.

Services will recover more slowly, expanding by 3.3 per cent in 2021 and 6.2 per cent in 2022, the report said, adding that efforts to contain a local outbreak of Covid-19 that began on Feb 20 are dampening service sector activities.

Travel restrictions are expected to remain in place for most of 2021, which means tourism is not expected to boost services this year, it said. Real estate is expected to recover from last year's contraction, in line with a similar trend for the construction industry.

"The uneven pace of the recovery across sectors will continue to put pressure on some households and firms this year, which will slow down the overall recovery," Durrani-Jamal said.

"Key risks to the outlook include widening community outbreaks of Covid-19, slower than expected growth for Cambodia's major trading partners such as the United States and EU, continued weakness in domestic demand, and stress on financial services and banking," she added.