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ADB Predicts Robust Growth for Cambodia: 5.8% Rise in GDP for 2024

Phnom Penh, April 11, 2024 – Cambodia is set to experience a significant acceleration in economic growth in 2024, driven by the dual engines of manufacturing and a resurgent tourism sector. This optimistic forecast comes from the Asian Development Bank (ADB), which projects the nation's GDP to expand by 5.8 percent in 2024 and further to 6.0 percent in 2025. The ADB's assessment, highlighted in its Asian Development Outlook (ADO) April 2024 report, points to a vibrant future for Cambodia's economy.

ADB Country Director for Cambodia, Ms. Jyotsana Varma, expressed confidence in the country's economic trajectory, attributing the positive outlook to robust performances in key sectors. "Following a commendable performance in 2023 despite global economic uncertainties, we are forecasting sustained robust growth for Cambodia over the next two years," Ms. Varma remarked. The garments, footwear, and travel goods (GFT) sector, in particular, is expected to see significant expansion, capitalizing on the momentum gained in the latter part of 2023.

The report outlines how Cambodia's economic growth in 2023, pegged at 5.0 percent, was buoyed by the resurgence of the tourism sector and steady manufacturing activity outside the GFT sector. Predictions for 2024 and 2025 suggest continued economic vigor, supported by a strengthening manufacturing base oriented towards exports. Moreover, inflation, which averaged at 2.1 percent in 2023 largely due to decreasing global energy costs, is anticipated to stabilize at around 2.0 percent for the coming two years.

While Cambodia aims for fiscal consolidation to recuperate reserves diminished by the pandemic, potential hurdles such as global economic downturns, private debt escalation, volatile energy prices, and climate change vulnerabilities loom over the longer-term economic landscape. Ms. Varma acknowledged these challenges but maintained a tone of cautious optimism for Cambodia's economic future.

The ADB report also touches on Cambodia's strategic preparations for graduating from the United Nations' least-developed country (LDC) category in 2027. This milestone is expected to elevate Cambodia's global stature and allure for investment but will introduce challenges linked to reduced access to concessional finance and preferential trade agreements critical to sectors driving growth and employment.

To navigate the impending LDC graduation successfully, the report advises Cambodia to bolster its global economic integration, market diversification, focus on higher value-added production, invest in sustainable infrastructure and human capital, and enhance domestic resource mobilization.

Reflecting on Cambodia's regional standing, Seasia Stats recently ranked it as Southeast Asia's fastest-growing economy for 2024, with the International Monetary Fund projecting a 6.1 percent economic expansion. Domestically, the Cambodian government anticipates a growth rate of 6.6 percent in 2024, an uptick from the previous year's 5.6 percent, while the World Bank projects a 5.8 percent growth rate for the year.

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