dustries, as well as agriculture, have fully
recovered. In contrast, the important travel
CAMBODIA Key conditions and and tourism sector - one of Cambodia’s
main growth drivers, accounting for about
challenges 2 million jobs and a quarter of GDP during
the pre-pandemic period - remained sub-
Table 1 2021
COVID-19 infections have resurged since dued. Labor market pressures have been
Population, million 16.9
February 2022, caused primarily by the magnified by an increased number of mi-
GDP, current US$ billion 28.5 Omicron variant. About 83 percent of the grant workers who have returned home
GDP per capita, current US$ 1686.4 population have received two doses of from abroad.
a 105.4
School enrollment, primary (% gross) coronavirus vaccine. Cambodia has shifted Cambodia’s total goods (excluding gold)
a 69.8 to a strategy for “living with COVID-19” exports accelerated to 22.8 percent in 2021,
Life expectancy at birth, years
Total GHG Emissions (mtCO2e) 69.7 enabling a broad-based economic recovery driven mainly by surging goods exports
Source: WDI, Macro Poverty Outlook, and official data.
to take shape. While strong domestic eco- to the United States which expanded 42.4
a/ WDI for School enrollment (2020); Life expectancy nomic momentum continues, a general percent (figure 2). The trade (and current
(2019). slowdown in global demand is looming. account) deficit, however, significantly
Financial market tightening in the United widened, largely caused by rising imports
States, changes in the growth and compo- of a few major items, especially gold used
Under the baseline scenario, the growth sition of economic activity, especially in as a hedge against volatility.
projection for 2022 remains at 4.5 per- China, and the war in Ukraine, will neg- Inflation has edged up further, reaching
atively affect the external environment. In 4.1 percent in January 2022. Supported by
cent, as a stronger domestic recovery
addition, an unmanageable resurgence of central bank open market operations, the
supported by the rollback of mobility re- Omicron or new variants could disrupt nominal exchange rate continued to be
strictions is offset by worsening global economic recovery. Rising energy and broadly stable, hovering at riel 4,100 per
demand and rising commodity prices. food prices could dampen consumer confi- U.S. dollar. Gross international reserves,
The recovery is expected to remain un- dence and worsen people’s welfare, nega- however, declined marginally, reaching
tively impacting poverty reduction. In ad- US$ 19.7 billion (9 months of imports) in
derpinned by domestic economic activity dition, high credit growth and concentra- December 2021, down from US$21.2 bil-
and agricultural commodity exports, tion of domestic credit in the construction lion at the end of 2020.
while Cambodia’s export-oriented manu- and real estate sector remain a key risk to Monetary conditions continued to be ac-
facturing is expected to face headwinds. Cambodia’s financial stability. commodative. Broad money growth accel-
erated to 16.3 percent in 2021, compared to
Inflationary pressures are projected to
15.3 percent in 2020. Thanks to improved
increase, led by rising food and oil confidence in the banking system and con-
prices triggered by the war in Ukraine . Recent developments tinued capital inflows, deposit growth out-
Risks to baseline forecast are broadly paced its pre-pandemic growth rate, in-
balanced and Cambodia maintains poli- The economic recovery has held up but creasing at 17.2 percent, while domestic
remains uneven. Traditional growth dri- credit grew 24.1 percent in December 2021.
cy space that it could deploy should vers, especially the garment, travel goods, The annual budget for 2022 is character-
these risks materialize. footwear, and bicycle manufacturing in- ized by continued (countercyclical) fiscal
FIGURE 1 Cambodia / Real GDP growth and contributions FIGURE 2 Cambodia / Merchandise (excluding gold) exports
to sectoral growth
Percent, percentage points US$ million YTD, y/y, percent change
8 2,500 30
Projections GTF Non-GTF Exports (rhs)
6 25
2,000
4 20
1,500 15
2
10
0
1,000 5
-2
0
-4 500
2011 2013 2015 2017 2019 2021e 2023p -5
Agriculture Industry
Services Net Taxes on Production 0 -10
Real growth Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
Source: Cambodian authorities and World Bank staff projections. Notes: e = es- Source: Cambodian authorities. Note: GFT = garment, travel goods, and
timate; p = projection. footwear (and other textile products).
MPO 1 Apr 22
support with the fiscal deficit expected to down the pace of poverty reduction as it
widen to 6.0 percent of GDP. Expenditure weighs on household budgets.
is budgeted to reach 26.7 percent of GDP, Outlook Over the medium term, the economy is
driven by continued fiscal support to mit- expected to trend back to potential, grow-
igate the impacts of the pandemic and Despite a general slowdown in global de- ing at around 6 percent. The new Law
expansion of public investment. External mand, growth is projected to hold up at 4.5 on Investment, the Cambodia-China and
borrowing is expected to finance about 60 percent this year under the baseline sce- Cambodia-Republic of Korea free trade
percent of the deficit, while the rest is nario, thanks to the rollback of mobility agreements and the Regional Comprehen-
to be financed by a drawdown of gov- restrictions made possible by Cambodia’s sive Economic Partnership are expected
ernment deposits (fiscal reserves) which high vaccination rate. The recovery is ex- to help boost investment and trade in the
stood at 17.4 percent of GDP in December pected to remain underpinned by domes- coming years. On the upside, a less per-
2021, down from 23.7 percent of GDP at tic economic activity and agricultural com- sistent global shock could improve the
the end of 2020. modity exports. Under the downside sce- outlook for Cambodia.
The cash transfer program has been the nario, growth is projected to reach only However, the negative impacts of the coro-
largest component of the government’s 3.8 percent in 2022. The downside scenario navirus on jobs and welfare are expected
support package. As of February 2022, it assumes a deterioration in domestic eco- to continue as the services sector, especial-
covered 690,000 households (2.7 million nomic conditions caused by rising infla- ly the travel, tourism, and hospitality in-
individuals) or approximately 19 percent tion, while external conditions worsen dustries, are facing persistent headwinds.
of households. The program has dis- caused by a marked slowdown in external It is crucial to implement structural re-
bursed US$ 593 million since the launch demand. Cambodia’s export-oriented forms embedded in the economic recovery
in June 2020, thus far mitigating some manufacturing is expected to face head- plan to improve Cambodia’s external com-
of the negative impacts for the poor and winds in the coming months, with a less petitiveness. Addressing supply side bot-
vulnerable households. favorable external environment which is tlenecks by reducing costs of doing busi-
The official poverty rate measured at the being reshaped by cyclical slowdown in ness, logistic, and energy, while eliminat-
national poverty line declined by 1.6 per- the U.S and structural slowdown in China. ing rigidities in major labor market regula-
centage points per year over the period In addition, the energy and food prices tions that prevent a robust recovery of the
2009-2019/20, driven substantially by ris- hike due to the economic consequences of job market remains key to a sustained eco-
ing labor (especially wage) earnings. the war in Ukraine is expected to slow nomic recovery and job creation.
TABLE 2 Cambodia / Macro poverty outlook indicators (annual percent change unless indicated otherwise)
2019 2020 2021e 2022f 2023f 2024f
Real GDP growth, at constant market prices 7.1 -3.1 3.0 4.5 5.8 6.6
Private Consumption 7.0 -0.8 1.3 1.3 1.4 1.5
Government Consumption 10.0 12.5 -28.3 7.2 14.2 16.6
Gross Fixed Capital Investment 6.9 11.2 -11.8 4.0 9.6 9.0
Exports, Goods and Services 7.8 1.1 14.9 16.5 17.2 18.5
Imports, Goods and Services 6.0 7.3 21.7 12.0 13.5 14.8
Real GDP growth, at constant factor prices 6.8 -3.1 2.8 4.5 5.8 6.5
Agriculture -0.5 0.4 1.1 1.3 1.5 1.5
Industry 11.3 -1.4 7.4 8.6 9.1 9.2
Services 6.2 -6.2 -1.0 1.6 4.1 5.6
Inflation (Consumer Price Index) 3.2 2.9 3.5 6.5 4.5 4.0
Current Account Balance (% of GDP) -15.2 -12.0 -28.5 -15.8 -13.6 -13.2
Net Foreign Direct Investment (% of GDP) 13.2 13.0 12.7 12.9 13.9 15.0
Fiscal Balance (% of GDP) 1.5 -4.3 -5.7 -6.0 -4.9 -3.7
Debt (% of GDP) 28.2 34.4 34.8 35.6 35.8 36.7
Primary Balance (% of GDP) 1.9 -3.7 -5.2 -5.5 -4.3 -3.1
GHG emissions growth (mtCO2e) 2.6 -1.5 -0.4 1.5 2.5 2.5
Energy related GHG emissions (% of total) 23.0 22.2 22.1 23.3 25.0 26.7
Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
MPO 2 Apr 22