In revising Cambodia’s 2023 gross domestic product (GDP) growth projection down to 5.3 percent from 5.5 percent earlier this year, the Asian Development Bank (ADB) noted several downside risks impacting economic outlook.

The revision is mainly due to “slower-than-expected” industry growth in the first half of the year, as it kept the prediction of six percent GDP growth for 2024, ADB’s latest outlook report on the region showed.

It said exports of garments, footwear and travel items declined by 18.6 percent year-on-year in the first half of 2023 but was partly offset by a 22.9 rise in exports of non-garment products, such as automotive parts, solar panels and furniture.

Inflation is expected to be three percent this year, but could expand to four percent in 2024. Jyotsana Varna, ADB country director for Cambodia, said better growth prospects in major advanced economies are likely to boost Cambodian exports for the remainder of 2023 “even as domestic industrial growth slowed earlier in the year”.

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“Services are the main contributor to growth as the sector exceeded expectations in the first half of the year, primarily fueled by robust tourism recovery,” she added.

On the outlook, ADB found several factors that might affect growth, such as “sluggish” growth in advanced economies, lower tourist arrivals and foreign direct investment inflows, and prolonged tightening of global financial conditions.

In addition, rising energy prices, high private debt concerns and domestic financial stability, as well as extreme weather exacerbated by climate change, challenge the Kingdom’s recovery.

According to the multilateral bank, its investment portfolio in Cambodia is worth $2.4 billion and the average annual lending from 2016 to 2022 is around $350 million.

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The bank is developing a new country partnership strategy for Cambodia from 2024 to 2028.

Cambodia’s GDP Growth Challenged by External Risks, AMRO

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