Rosier growth forecast for Cambodia, fueled by tourism and industrial exports

PHNOM PENH (Xinhua): Cambodia's economy is forecast to grow 5.8 percent in 2024, up from 5 per cent in the year before, fueled by a further rebound in tourism and strong industrial export prospects, according to an Asian Development Bank's (ADB) flagship economic report released to the media.

The growth is projected at a higher level of 6 per cent in 2025 for the South-East Asian country.

"We expect growth to be robust in 2024-2025, with the garments, footwear, and travel goods (GFT) sector poised for a significant upturn building on the positive momentum during the last quarter of 2023," ADB Country Director for Cambodia Jyotsana Varma said during the launch of the report in Phnom Penh.

She said the kingdom's inflation is predicted to remain low at around 2 percent over the next two years on expected lower energy prices, slightly decelerating from 2.1 percent in 2023.

Challenges such as potential global economic slowdowns, rising private debt, fluctuating energy prices, and climate vulnerabilities could impact the outlook in longer term.

"These challenges add layers of complexity to Cambodia's economic narrative," Varma said. "But, the country is moving ahead with cautious optimism."

Cambodia's economic growth is mainly driven by GFT export, tourism, agriculture, as well as construction and real estate.

Poullang Doung, ADB Cambodia's senior economics officer, said stronger industrial exports will drive faster growth, projecting that industrial output growth will accelerate to 8 percent in 2024 and 8.4 percent in 2025, as construction may see only modest growth.

He said further recovery in tourism will fuel economic growth and that services are projected to grow by 5.4 percent in 2024 before tapering slightly to 5.2 percent in 2025, as tourism continues to recover.

"Tourist arrivals, especially from fellow Association of South-East Asian Nations (Asean) members, will likely increase, supported by the region's positive economic prospects," he said.

The recent inauguration of the Chinese-invested Siem Reap Angkor International Airport will also likely attract more tourists, he added.

Poullang said agriculture will likely continue its moderate growth of 1.3 per cent in 2024 and 1.4 percent in 2025, buoyed by rising export demand and domestic consumption.

"The positive trajectory is further supported by recent bilateral free trade agreements (FTAs) with China, South Korea, and the United Arab Emirates, and Cambodia's participation in the Regional Comprehensive Economic Partnership (RCEP)," he said.

Sophie Duong T. Nguyen, ADB Cambodia's senior country economist, said trade plays a very important role to Cambodia's economy and that the RCEP and other bilateral FTAs have definitely brought benefit to Cambodia in terms of export and investment.

"The RCEP has significantly impacted Cambodia's economy by boosting trade. The export volume grew by almost 29 percent year-on-year for Cambodia," she said. "So, all of these will impact the economy and contribute to the economic performance of Cambodia."

Entering into force in 2022, the RCEP comprises 15 Asia-Pacific countries including 10 Asean member states, namely 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. - Xinhua

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