In the first half of this year, various multilateral/regional development banks provided bullish projections of Cambodia’s economic growth for 2024 and 2025; estimates for this year were in the range of between 5.8% to 6.2%, and even higher for next year.

In their respective updates, the World Bank (WB) and the Asian Development Bank (ADB)  estimated a 5.8% growth for Cambodia in 2024, the International Monetary Fund (IMF) predicted a 6.0% growth, while the ASEAN+3 Macroeconomic Research Office (AMRO) had the most bullish projection at 6.2%.

Amidst a sluggish property market, which has been a sharp contrast to the pre-Covid bubble years and prior to the ban on online gambling in January 2021, a subdued domestic demand, rising nonperforming loans (NPLs) reported by many banks in the overly crowded financial sector, and tight cash flow for most businesses, are these growth estimates for the Kingdom overly optimistic, or realistic?

Yet, these are reports and estimates by reputable international institutions, whose teams of experts meticulously compile relevant data, track and monitor local developments and external factors, and carefully analyze them before their assessment and deliberations are shared publicly.

Mr. Ong Teong Hoon, Director and Shareholder Representative of Phillip Bank Plc, shared, “Without the benefit of access to macroeconomic data, my anecdotal observations, coupled with conversations with some business people and bankers, these projections are what we hope to see. The sensing is if this year is not worse than last year, we would be delighted.“

Mr. Roger Dai, General Manager of Capri by Fraser Phnom Penh, said, “As a hotelier, I am confident with the hotel business outlook. Cambodia’s tourism sector is on a recovery path, reported more than 2.5 million air travelers during the first five months of 2024, a year-on-year increase of 22%.”

Mr. Chenda Kim, Director and Head of Operations of Indochina Research Cambodia, added, “The latest findings from the ‘IRLight Q2’ 2024 syndicated report of Indochina Research Cambodia shows that the monthly household income (based on respondent claim) still posts continuous slow down over the past 8 quarters. This downward trend can be attributed to job cuts (by 46%), salary reduction (of 29%) and loss of part-time jobs (18%). Although this scenario seems to be at odds with the positive forecasts from the international institutions, we will have to monitor in the coming months, how the government’s efforts to boost economic activities, including infrastructure development and tax reforms, will help alleviate the consumers situation.”

What can be gleaned from the aforementioned comments – which are similarly echoed by various other industry experts and contacts – is that there is wariness, or a general state of cautiousness in regard to projections of Cambodia’s growth in 2024 and the following year.

The usual caveat is that such estimates will be updated and revised by the reporting institutions over the remaining months ahead, and they will continue to provide useful insights into how the Cambodian economy is faring vis-à-vis the regional and global economic forces and circumstances.

At least relative to other countries in Asia and in the Pacific, and more specifically within Southeast Asia, the reporting institutions believe that Cambodia is on the right track towards more sustainable growth.

Quick Facts

The projected growth for Cambodia in 2024 is:

  • Above the projected average growth of 4.5% to 5.0% for countries in Asia and the Pacific
  • Ahead or on par with Vietnam, second only to the Philippines

Favorable factors and developments:

  • Recovery in GFT exports and an uptick in non-GFT exports such as agricultural products
  • ASEAN countries have become its 2nd largest export market after the US
  • Low inflation, return of international tourists
  • Continuing political stability, policy reforms, youthful demography

Challenges ahead:

  • Sluggish / uncertain global demand
  • Muted domestic spending / consumption
  • Real estate market ‘correction’
  • Rising NPLs and ability to attract more FDIs
  • Skills / knowledge gaps in labor

What needs to be done:

  • Diversify manufacturing and exports beyond traditional GFTs
  • Improve skills/knowledge and productivity of workers
  • Secure FTAs to replace tariff exemptions enjoyed under current LDC status, in anticipation of graduation from latter
  • Continue to attract international tourists and diversify sources of FDIs
  • Maintain macro-financial stability, restore fiscal space, safeguard financial sector
  • Improve business competitiveness environment and trade facilitation