A World Bank report has revealed Cambodia’s economy is firmly on a path to recovery, forecast at about 5.5 percent in 2023, led by manufacturing exports and growth in services and agriculture.
A World Bank press release on May 18, said that a strong rebound in services, especially trade, travel, and hospitality, has helped bring Cambodia back to pre-Covid-19 growth levels, with foreign arrivals accelerating as the country hosts the Southeast Asian Games and ASEAN Para Games.
This revival is also boosted by easing domestic prices as global oil and food prices stabilize.
Also driving the nation’s economic rebound is the expansion of the agriculture sector due to improved access to regional markets following newly ratified trade agreements. All of these factors have led the World Bank to predict economic growth will accelerate to 5.5 percent in 2023.
However, an extended slowdown in external demand could weaken export-oriented manufacturing, while continued global financial tightening could expose risks in Cambodia's highly-leveraged financial sector, the report warned.
“To safeguard its economic recovery, Cambodia needs to diversify its tourism products and destinations and improve its trade competitiveness by boosting connectivity, reducing trade barriers and streamlining customs procedures,” said World Bank Country Manager for Cambodia, Maryam Salim.
In the medium-term, growth is expected to rise six percent, bolstered by strong goods and service exports and a substantial increase in investment, especially under public-private partnerships for large infrastructure projects such as seaports and roads.
Cambodia has been able to increase social sector spending in recent years, notably on health and education, but the report noted that the quality of that spending could be improved. A stronger focus on both allocative and operational efficiency could help address the uneven distribution of teachers among grade levels and low public trust in state health facilities, it added.