PHNOM PENH, CAMBODIA (28 April 2021) — Cambodia’s economy is forecast to grow 4.0% this year and 5.5% in 2022, as the economic recovery in major trading partners boosts demand for Cambodia’s exports, according to an Asian Development Bank (ADB) report released today.
“The economy contracted by 3.1% in 2020 because of the global coronavirus disease (COVID-19) pandemic. The government has responded quickly to the recent spike in cases, and we expect the economy to return to growth in 2021. This will help increase household incomes, but not all sectors and regions will benefit equally, so it will be essential to closely monitor household welfare and the need for additional support,” said ADB Country Director for Cambodia Sunniya Durrani-Jamal.
According to the Asian Development Outlook (ADO) 2021, industrial production is expected to rise 7.1% in 2021 and 7.0% in 2022 on the back of a rebound in the garments, footwear, and travel goods sector, as well as growth in other light manufacturing such as electronics and bicycles. Agriculture is expected to grow by 1.3% in 2021 and 1.2% in 2022, underpinned by higher crop production after last year’s flood damage, continued growth in aquaculture, and rising agriculture exports to the People’s Republic of China.
Services will recover more slowly, expanding by 3.3% in 2021 and 6.2% in 2022. Efforts to contain a local outbreak of COVID-19 that began in February 2021 are dampening service sector activities. Travel restrictions are expected to remain in place for most of 2021, which means tourism is not expected to boost services this year. Real estate is expected to recover from last year’s contraction, in line with a similar trend for the construction industry.
“The uneven pace of the recovery across sectors will continue to put pressure on some households and firms this year, which will slow down the overall recovery. Key risks to the outlook include widening community outbreaks of COVID-19, slower than expected growth for Cambodia’s major trading partners such as the US and EU, continued weakness in domestic demand, and stress on financial services and banking,” said Ms. Durrani-Jamal, adding that the government needs to maintain its accommodative fiscal policy stance this year and next to support growth.
Currently, ADB is implementing $2.1 billion of investment projects in Cambodia. In 2020, ADB committed $477 million in sovereign loans and grants, and catalyzed an additional $281.3 million through cofinancing for Cambodia. ADB’s lending pipeline for 2021—2023 includes $1.35 billion of concessional lending and $32.4 million in grants to support the country’s economic development and recovery from the COVID-19 pandemic.
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.