The World Bank has revised its economic growth projection for Cambodia, forecasting a 5.4% increase in GDP for the current year, a slight decrease from the previous estimate of 5.5%. This adjustment comes in the wake of global economic instability, yet the outlook remains positive with anticipated growth rates of 5.8% in 2024 and potentially 6.1% by 2025, contingent on structural reforms and investments in infrastructure and regional trade.
Despite a solid performance last year with a 5.2% growth rate, Cambodia's economic landscape faces hurdles. Insufficient logistics and inconsistent energy supplies continue to pose significant challenges. Additionally, external economic shocks have led to a downturn in manufacturing and exports, resulting in a five percent reduction in manufacturing jobs.
In response to these difficulties, the Cambodian government has stepped up with financial support for workers who have lost their jobs due to the manufacturing slowdown. The World Bank's report stresses that private sector development is vital for sustained economic growth, pointing out that areas such as transportation infrastructure and power supply need substantial improvement.
The report also highlights the need for structural reforms, including enhancing the business environment and improving workforce skills, as critical steps forward. It warns of potential volatility from high household debt levels within real estate sectors and the possibility of oil and food price shocks that could affect future economic stability.
Maryam Salim, World Bank Country Manager, has emphasized the importance of private sector development for continued economic expansion. Similarly, Davide Furceri, IMF Mission Chief, acknowledges that despite various challenges, there has been steady progress in Cambodia's economy.
The focus now shifts towards implementing strategic reforms to bolster infrastructure and regional trade relations, which are expected to drive Cambodia's economy closer to its pre-pandemic growth rates over the next two years.
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