PHNOM PENH: The National Bank of Cambodia (NBC) projected Cambodian economic growth at 6.4 percent in 2024, up from an estimated 5.5 percent in 2023, mainly driven by the tourism and manufacturing sector, according to an NBC's Economic and Banking Industry Update issued on Monday.

“Cambodia's economy is optimistically expected to continue to grow at around 6.4 percent in 2024, supported mainly by growth in tourism and manufacturing,” read the report.

Tourism is expected to recover due to the improvement of tourism situation in the region as well as the continued development and improvement of infrastructure that will support the sector, it said.

Through the implementation of the new investment law, the manufacturing sector is expected to achieve better growth than in 2023, especially non-garment manufacturing products, and the garment sector is expected to grow steadily.

Agriculture is projected to grow slightly over 2023, benefiting from continued market diversification to the members of the Regional Comprehensive Economic Partnership Agreement (RCEP) and bilateral free trade agreements, coupled with the Royal Government of Cambodia's support policy to boost production and markets.

The construction and real estate sectors affected by the recent crisis are projected to continue to grow slowly, which will continue to be supported by public infrastructure development projects, coupled with a slow recovery in domestic demand focused on affordable housing, while demand for luxury construction serving non-residents is expected to remain weak.

Inflation in 2024 is projected to be 2.5 percent slightly higher than in 2023, mainly due to expectations that global crude oil prices may rise after oil exporters plan to cut supplies.

“In this context, continued prudent monetary policy will continue to stabilize the Riel exchange rate, as well as continue to contribute to stabilizing prices and protecting the purchasing power of the Riel,” the report underlined.

“The monetary policy framework will be strengthened, especially the development of monetary instruments and markets, in line with the launch of the NBC's benchmark interest rate test to orient the Riel interest rate in the market to a reasonable level,” it added.

NBC also laid stress on possible external risks including a decline in flows of international trade, and investment as well as international financial market uncertainty, while internal risks can be a sluggish recovery in construction and real estate due to a low inflow of foreign investment, and climate change.