Phnom Penh: The World Bank predicts that Cambodia’s economic growth will slow down by 0.2% next year.
The World Bank issued a report, indicating that Cambodia’s economic growth in 2019 remained at a strong 7% level. Exports remained strong throughout the year, and the construction industry remained active.
In 2019, Cambodia’s GDP growth rate was higher than that of other ASEAN countries. GDP growth in Vietnam was 6.8%, Myanmar 6.6% while Laos saw 6.5%. Driven by garment exports and tourism, Cambodia’s economy has sustained growth between 1998 and 2018, making it one of the fastest-growing economies in the world.
The report pointed out that in the first half of this year, the value of Cambodia’s newly approved projects increased (through foreign direct investment and domestic funds), and nearly 40% of foreign investment came from China. Tourism is still strong. In the first half of the year, the number of international tourists increased by 11.2%, of which nearly 40% were Chinese tourists.
Inflation is predicted to remain stable at 2.5%, behind Myanmar at 6.8%, Philippines at 3.8% and Vietnam at 3.5%, but behind Laos and Malaysia, both 2% and Thailand’s 1%.
However, due to global factors, the World Bank predicts that the Cambodian economy will slow down to 6.8% in 2020. Per capita GDP is also expected to fall by 0.2% to 4.2%.
Weak global demand, including from China, and increased uncertainty caused by continued trade tensions between Beijing and Washington will lead to a decline in global export and investment growth, posing a long-term threat to East Asia and the Pacific.
The decision on the European Union’s Everything But Arms tariff agreement could also potentially harm exports, especially in the garment industry.