Cambodian economy estimated to grow at 5% in 2022, Omicron or not

The National Bank of Cambodia (NBC) recently estimated the country’s economic growth at 5 per cent for 2022 due to the anticipated global recovery, despite the potential emergence of new variants of the novel coronavirus.

The economy expanded by around 3 per cent last year, backed by the resumption of domestic activity and other benefits, it said.

Cambodia’s economy will recover from last year’s 3.1 percent contraction this year and strengthen even further in 2022, according to Fitch Solutions in a report released in November last year.

It forecasts real gross domestic product (GDP) of 2.5 percent in 2021 and 4.7 percent in 2022.

“Our forecast continues to reflect the poorer prospects for services growth amid the country’s protracted struggle to flatten its new Covid-19 infections curve in 2021, as well as a slow recovery in the tourism sector in 2022,” said the affiliate of credit ratings company Fitch.

The central bank pegged the inflation rate at 2.6 per cent in 2022, down from 2.9 per cent in 2021, and said the exchange rate of the local currency would remain stable, at about 4,075 riel to the greenback.

NBC released its ‘Macroeconomic and Banking Sector Developments in 2021 and Outlook for 2022’ report on December 31.

The global economy is expected to remain on a positive growth trajectory in 2022, with diverging rates across countries based on the effectiveness of COVID management and supportive government policies, it said.

 
But SARS-CoV-2 mutations such as Omicron will remain a key challenge this year, along with a whole suite of other issues related to climate change, geopolitics and trade, it noted.

The gradual global economic recovery will support Cambodian exports, especially of non-garment products such as electrical spare parts and bicycles that align with diversification strategies, NBC suggested.

It said the Regional Comprehensive Economic Partnership (RCEP) and free trade agreements with China and South Korea would create a strong tailwind this year for the agricultural sector, trade, goods and services, investment flows and e-commerce.

Source: KhmerTimes