PHNOM PENH: The Asian Development Bank (ADB) has maintained its growth forecast for Cambodia at 5.8 per cent for 2024 and 6 per cent for 2025, according to its latest outlook released on Wednesday (Sept 25).
"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," she added.
The lender has also revised down its earlier inflation projection for 2024 from 2 per cent to 0.5 per cent, reflecting the slow increase in food prices and decline in fuel prices in the first half of 2024.
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 said.
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 per cent decline during the same period in 2023.
Meanwhile, growth in exports of non-GFT products slowed to 1.3 per cent year on year from 21.2 per cent. Imports of construction materials and equipment surged by 23.3 per cent year on year in the first half of 2024, driven by public infrastructure investment.
Agriculture is projected to grow by 1.2 per cent in 2024 and 1.3 per cent in 2025, the report said, adding that services are forecast to grow by 5.4 per cent in 2024 before tapering to 5.2 per cent in 2025.
The report added that 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 2 billion U.S. dollars by mid-2024, from 2.1 billion dollars during the same period in 2023, the report said.
"This was supported by growth in nonfinancial sectors. However, investment in the financial sector slowed appreciably due to lower banking profits," the report said.
According to the report, potential risks to Cambodia's economic outlook include weaker growth in major economies including Europe and the United States, high private debt, volatile global fuel prices, and severe impact from extreme weather events. - Xinhua
