Cambodia’s GDP is expected to grow by 5.5 percent with a low inflation rate of two percent in 2023, due to external factors and the re-opening of the economy.

On Thursday, the National Bank of Cambodia (NBC) released its Dissemination of Financial Stability Report 2022. It showed that Cambodia’s economy is expected to increase by 5.5 percent with only about a two percent inflation rate due to its economic opening coupled with various external factors.

"These risks include the prolonged tensions between Russia and Ukraine and the global financial situation which impacts Cambodia's prospects for exports and investment. Second, the prolonged issues with China's real estate market might impede the development of real estate investment in Cambodia,” it said.

“Rising loan interest rates as a result of rising interest rates on the international market could also slow domestic investment.”

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Besides external risks, potential internal risks also need to be considered and monitored, which can arise from the real estate sector. About a decade before the Covid-19 crisis, Cambodia's real estate sector grew rapidly.

However, the global and domestic economic slowdown due to the Covid crisis and the recovery in uncertainties have caused a steady decline in the industry’s demand, the report noted.

“This situation requires careful monitoring, especially in lending to the real estate sector, as well as strengthening the cooperation between the relevant authorities in order to manage potential risks and their impact on the sector,” it said.

In 2022, Cambodia's economy grew to 5.2 percent, thanks to increased exports, a return to normal domestic economic activity, and a rapid rebound in the tourist industry. While inflation rose to 5.4 percent as a result of external factors and growing internal demand during the Covid-19 crisis. This also resulted in higher pricing for products and services.

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However, the riel exchange rate has been kept stable at about 4,102 riels per US dollar, which has helped reduce the pressure on inflation. Meanwhile, international reserves continue to be maintained at a reasonable level, which can guarantee the import of goods and services for seven months.

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