PHNOM PENH: The Asian Development Bank (ADB) has maintained its growth forecast for Cambodia at 5.8 percent for 2024 and 6.0 percent for 2025, the bank said in its press release on Sept. 25.
ADB has revised down its earlier inflation projection for 2024 from 2.0 percent to 0.5 percent, reflecting the slow increase in food prices and decline in fuel prices in the first half of 2024, according to the Asian Development Outlook (ADO) September 2024.
“The rebound in the manufacturing sector— especially garments, footwear, and travel goods (GFT) — is powering the country’s economic growth,” said ADB Country Director for Cambodia Jyotsana Varma. “Agriculture and tourism are steadily gaining ground, while continued inflows of foreign direct investment are fueling the country’s economic momentum. Together, these forces are setting the stage for a promising 2024 and positioning Cambodia for robust growth in 2025 and beyond.”
The lowering of inflation forecasts reflects reduced prices of fuel-related goods and services, along with decreased costs of fertilisers, providing support to agricultural production. This will provide much-needed relief for people, especially the most vulnerable, who have faced challenges in recent years due to rising food and fuel prices.
The report highlighted that GFT exports rose by 16.9 percent year on year in the first half of 2024, rebounding from an 18.6 percent decline during the same period the previous year. Meanwhile, growth in exports of non-GFT products slowed to 1.3 percent year on year from 21.2 percent. Imports of construction materials and equipment surged by 23.3 percent year on year in the first half of 2024, driven by public infrastructure investment. Agriculture is projected to grow by 1.2 percent in 2024 and 1.3 percent in 2025. Services are forecast to grow by 5.4 percent in 2024 before tapering to 5.2 percent in 2025.
This forecast is supported by a 22.7 percent year on year increase in tourist arrivals in the first half of 2024, reaching 94.8 percent of the pre-pandemic levels in the first half of 2019.
Foreign investment inflows continued although they decelerated somewhat to US$2 billion by mid-2024, from US$2.1 billion during the same period last year. This was supported by growth in nonfinancial sectors. However, investment in the financial sector slowed appreciably due to lower banking profits.
Potential risks to Cambodia’s economic outlook include weaker growth in major economies like the People’s Republic of China, Europe, and the United States, high private debt, volatile global fuel prices, and severe impact from extreme weather events.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.