Cambodia’s economy sees upward trend in Q1 ’24 – World Bank

Cambodia’s economic activity is showing positive signs in the first quarter of 2024, driven by a resurgence in both services and goods exports, as reported by the World Bank’s Cambodia Economic Update released on Thursday.

The Cambodian economy is expected to experience a slight improvement, with growth rising from 5.6 per cent in 2023 to an estimated 5.8 per cent in 2024, as per the report.

This positive trend is projected to continue, reaching 6.1 per cent in 2025 and 6.4 per cent by 2026. This sustained recovery is fueled by a revival in key sectors: garment, travel goods, footwear exports, and tourism.

To achieve sustained economic growth, Cambodia needs to focus on maintaining macro-financial stability, said Maryam Salim, World Bank Country Manager for Cambodia.

This involves restoring fiscal space, protecting the financial sector, and enhancing competitiveness through business environment improvements, streamlined trade procedures, reliable energy supply, and a stronger education system, Salim added.

International tourist arrivals in the first quarter reached 84 per cent of pre-pandemic levels, signaling a strong recovery in tourism.

Garment, travel goods, and footwear exports have bounced back, while non-garment exports, especially agricultural products, have remained robust.

The Association of Southeast Asian Nations (ASEAN) is now Cambodia’s second-largest export market after the US. Increased foreign investments in manufacturing and agriculture have also boosted the economy.

In March, inflation hit zero as food prices slowed down. The current account saw a record surplus in 2023, thanks to a shrinking trade deficit and higher tourism earnings.

However, construction is still slow due to the property market correction, leading to a drop in domestic credit growth, affecting private spending and revenue collection.