Cambodia’s Economy Faces A Slow Recovery

The International Monetary Fund is warning Cambodia’s economy will take several years to reach levels of pre-pandemic growth
A rice worker in Phnom Penh on December 7, 2021. Picture: Sam
A rice worker in Phnom Penh on December 7, 2021. Picture: Sam

Cambodia’s pandemic-hit economy faces a slow recovery, with a 2.2 percent growth in 2021 before gradually increasing to 6.5 percent after a few years, predicts the International Monetary Fund (IMF).

In its 2021 Article IV Consultation with Cambodia released on Friday, IMF said COVID-19 has hit the economy with a collapse in external demand in 2020 and community spread of the virus in 2021.

The government rapidly redirected resources to healthcare and to support livelihoods, including a new system of cash transfers to vulnerable households. Despite extensive government support, the economy has suffered. Growth is estimated to have contracted by 3.1 percent in 2020, after an annual increase of almost 7 percent in previous years.

“Nonetheless, the economy has been badly affected, and the recovery is gradual. Community spread of the virus in 2021 set back the recovery,” IMF said.

“Future growth depends heavily on the course of the pandemic. Faster containment of the virus in Cambodia and other countries will facilitate resumption of tourism; slower progress would damage growth further.”

The crisis has put public finances under stress, while in real estate banks’ loan portfolios were already concentrated. As the pandemic has continued, loans to tourism, transport, and trade sectors have also come under financial pressure, added the IMF.