ADB Forecasts Cambodia’s Growth At 5.8 Percent In 2024
The Asian Development Bank (ADB) has maintained its growth forecast for Cambodia at 5.8 per cent for 2024 and 6.0 per cent for 2025. It has revised down its earlier inflation projection for 2024 from 2.0 to 0.5 per cent, reflecting the slow increase in food prices and the decline in fuel prices in the first half of 2024, according to the Asian Development Outlook (ADO) for September 2024.
ADB Country Director for Cambodia, Jyotsana Varma, stated that the rebound in the manufacturing sector, especially in garments, footwear, and travel goods (GFT), is powering Cambodia’s economic growth.
According to the General Department of Customs and Excise, in H1 2024, Cambodia exported products from this sector to the value of USD 6.24 billion which reflected a 16.4 per cent increase from the same period in 2023.
Varma noted, “Agriculture and tourism are steadily gaining ground, while continued inflows of foreign direct investment are fueling the country’s economic momentum. Together, these forces are setting the stage for a promising 2024 and positioning Cambodia for robust growth in 2025 and beyond.”
The ADB’s release indicated that the lowering of inflation forecasts reflects reduced prices of fuel-related goods and services, along with decreased costs of fertilisers, providing support to agricultural production. This will offer much-needed relief for people, especially the most vulnerable, who have faced challenges in recent years due to rising food and fuel prices.
- The report highlighted that GFT exports rose by 16.9 per cent year-on-year in the first half of 2024, rebounding from an 18.6 per cent decline during the same period the previous year.
- Growth in exports of non-GFT products slowed to 1.3 per cent year-on-year, down from 21.2 per cent.
- Imports of construction materials and equipment surged by 23.3 per cent year-on-year in the first half of 2024, driven by public infrastructure investment.
- Agriculture is projected to grow by 1.2 per cent in 2024 and 1.3 per cent in 2025.
Other key metrics to note are that services are forecast to grow by 5.4 per cent in 2024 before tapering to 5.2 per cent in 2025. This forecast is supported by a 22.7 per cent year-on-year increase in tourist arrivals in the first half of 2024, reaching 94.8 per cent of pre-pandemic levels in the first half of 2019.
Foreign investment inflows continued, although they decelerated somewhat to USD 2 billion by mid-2024, from USD 2.1 billion during the same period in 2023. This was supported by growth in non-financial sectors. However, investment in the financial sector slowed appreciably due to lower banking profits.
Potential risks to Cambodia’s economic outlook include weaker growth in major economies like the People’s Republic of China, Europe, and the United States, high private debt, volatile global fuel prices, and severe impacts from extreme weather events.
According to government data from July, Cambodia's macroeconomic performance is showing signs of recovery, with the country's GDP growth forecast in the medium term for 2025-2027 expected to reach 6.5 per cent and inflation projected to normalise down to 2.5 per cent.