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World Bank Predicts Slow Rebound for Cambodian Economy

Phnom Penh: A new forecast by the World Bank shows that Cambodia's economic growth will experience a slow rebound, given the ongoing community outbreak. It says growth will hit just 2.2% this year, but will recover to 4.5% next year and 5.5% in 2023. Before the pandemic hit, the kingdom’s economic growth had averaged at around 7% for more than a decade.

The World Bank says Cambodia “is experiencing a resurgence of Covid-19 cases which has slowed the recovery, especially of the service, construction, and real estate sectors. The growth projection for 2021 is now revised down to 2.2%, despite strong export performance supported by improved external demand conditions”.

The bank says "Cambodia’s outlook remains highly uncertain and risks are tilted to the downside. Despite accelerated vaccination progress, risks of a protracted outbreak and further disruption remain high, given continued high numbers of infections and deaths.”

It says the protracted outbreak is being caused by the more transmissible Delta variant, pointing out that infections and deaths have risen quickly. The outbreak has lingered since the second quarter of 2021 and has slowed the economic recovery. It says the “important travel and tourism sector, which was estimated to have provided about 2 million jobs and contributed a quarter of the kingdom’s GDP during the pre-pandemic period has virtually collapsed”.

While the bank says risks are tilted to the downside, there is cause for optimism. Schools have reopened and plans to restart international tourism are being developed. The kingdom’s high vaccination rate also means the Cambodian economy will start to rebound before many of its neighbours.

Thanks to improved external demand conditions, the World Bank says merchandise exports have also strengthened, expanding at 17% year-on-year during the first seven months of 2021, driven partly by a recovery of exports of garment, footwear, and travel goods, particularly to the United States.

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