Cambodia can return to sustained economic growth by raising productivity, diversifying exports and taking steps to boost domestic investment, according to the World Bank.
The economy grew an average 7.7 percent between 1995 and 2019 but contracted by 3.1 percent in 2020. Gross domestic product recovered to 2.2 percent last year, according to World Bank estimates. It said this month the economy is likely to grow 4.5 percent this year, accelerating to 5.5 percent in 2023.
The country’s dependence on a narrow range of products, markets, and financing sources left it poorly positioned to absorb the shocks caused by the Coronavirus pandemic according to the World Bank’s Cambodia Economic Memorandum: Resilient Development, a Strategy to Diversify Cambodia’s Growth Model.
“Getting back to a sustainable growth path will require an ambitious reform agenda that focuses on improving the capabilities of Cambodia’s firms, workers, and households; strengthening regulations to address market distortions and improve the enabling environment for business; and investing in infrastructure that supports higher-quality growth,” said World Bank Country Manager for Cambodia Maryam Salim. “A number of short- and medium-term policy actions can support an economic recovery strategy that will allow Cambodia to build back better after the COVID-19 crisis.”
The World Bank said Cambodia needs to end the reliance on products such as garments, footwear, rice and cassava, that account for 80 percent of Cambodia’s total exports. It also recommended finding new markets to reduce reliance on the European Union and the United States, which take 69 percent of merchandise exports.
Upgrading contributions to global value chains, creating added value in agriculture, and increasing competitiveness in the services sector could diversify exports, the bank said. It also recommended promoting higher savings, encouraging foreign investment in the most productive sectors, and improving financial access to support domestic investment.
Prime Minister Hun Sen said on Sunday Cambodia’s economy is likely to grow by more than 5 percent this year after a growth of around 3 percent last year, thanks to the country’s reopening and the end of domestic restrictions on business and social activities.
This article was first published in Khmer Times. All contents and images are copyright to their respective owners and sources.
