International Business News – The Singapore-based ASEAN-China-Japan-Korea Macroeconomic Research Office (AMRO) recently released a report saying that Cambodia’s economy will grow by 5.0% in 2022 due to high vaccination rates and a strong fiscal stimulus package.
AMRO also said that Cambodia’s exports to the US and EU will decline in the second half of this year due to lower orders, but Cambodia’s economy has remained resilient.
The report pointed out that the early lifting of epidemic prevention restrictions has led to the recovery of domestic socio-economic activities, while strong external demand supports Cambodia’s economic recovery in the first half of 2022. As the economy recovers and the Covid-19 situation improves, it will be critical to refocus policy on structural reforms that will help boost the economy’s long-term growth potential.
It is reported that the above-mentioned preliminary assessment of AMRO was released following the visit of the AMRO delegation to Cambodia from July 20 to August 3 this year.
AMRO senior economist pointed out that Cambodia’s economy is forecast to achieve an annual growth rate of 5% this year, and thanks to related strategies such as high vaccination rates and a strong fiscal stimulus plan, we expect Cambodia’s domestic economy to continue to improve. However, the export outlook will be challenging as the US and EU are expected to reduce orders significantly in the second half of the year, which could weigh heavily on the apparel industry.
In addition, the World Bank earlier forecast Cambodia’s economy to grow by 4.5% this year. The World Bank also noted that while Cambodia’s domestic economic activity and merchandise exports continued to recover from the Covid-19 growth, they remained unbalanced, especially as the Russian-Ukrainian war drove inflation.
Cambodian Prime Minister Hun Sen called on Cambodia on June 13 this year to prepare for the economic recession caused by the new crown epidemic and the Russian-Ukrainian war.
Hun Sen said: “This is something we must work together to maintain good macroeconomic stability, prevent inflation and maintain the purchasing power of the riel. Our economy has just recovered after the epidemic, but it is unbelievable that Russia and Ukraine have the war has begun to impose another burden on the nations of the world.”
The report released by AMRO also noted that Cambodia’s average inflation rate was 6.6 percent in the first half of this year, compared to 2.9% last year.
Higher price pressures on energy and food are expected to spread to other commodities, exerting broader inflationary pressures, with consumer price index (CPI) inflation expected to rise to 5.9% in 2022, the report said.