The FINANCIAL — Economic growth in Cambodia remains robust and is projected to accelerate slightly to 6.9 percent in 2018, compared with 6.8 percent in 2017, buoyed by a rebound in textile and apparel exports as well as tourism and agriculture, says a new World Bank report.
Rising government spending and favorable global conditions, including robust demand in advanced economies, are expected to underpin Cambodia’s high growth trajectory, according to the latest Cambodia Economic Update (CEU), launched today.
Risks remain, however, and they include erosion of export competitiveness due to rapidly rising real wages, a buildup of vulnerabilities from a prolonged real estate and construction boom, potential election-related uncertainty, and periodic jolts of protectionism and escalating trade disputes between the world’s largest trading nations.
“To maintain strong growth, it is essential that Cambodia invests more in education and skills training while addressing the constraints facing small and medium businesses. Investing in people is the best for a more prosperous future,” said Inguna Dobraja, World Bank Country Manager for Cambodia.
Cambodia, the report noted, can diversify growth and create more jobs by reducing the costs of firm formalization, operation, and financing. The report also recommends Cambodia to closely monitor the construction and real estate boom by developing macro-prudential policies that help reduce the scope for speculative activities.
Tourist arrivals accelerated to 11.8 percent in 2017, compared with 5 percent in 2016, thanks to the authorities’ efforts to establish more regional flights, including to China, an important market for tourism. The agriculture sector also rebounded, with expansion of rice and rubber plantations and the gradual recovery of agricultural commodity prices.
The Cambodia Economic Update is a biannual report that provides up-to-date information on macroeconomic developments in Cambodia, both in the short and medium term.