According to a recent report released by the Asian Development Bank (ADB), Cambodia's economy is expected to see steady growth in the coming years, with a projected growth rate of 5.5% in 2023 and 6.0% in 2024. The report attributes this positive outlook to a stronger recovery in the tourism sector and increased growth in the services industry.
Jyotsana Varma, ADB Country Director for Cambodia, emphasized the ongoing tourism recovery as a key driver of Cambodia's economic performance in 2022. Varma also highlighted the country's positive economic outlook, citing robust growth, a shrinking current account deficit, and moderate inflation in 2023.
The Asian Development Outlook (ADO) April 2023 report further projects a growth rate of 7.3% for the tourism sector in 2023, followed by a slight easing to 6.8% in 2024. In terms of inflation, the report forecasts a moderate average rate of 3.0% in 2023 and 4.0% in 2024. The report underscores the importance of Cambodia's ongoing efforts to increase green investments to unlock long-term growth potential.
The ADO April 2023 report reveals that Cambodia's economy experienced an estimated growth rate of 5.2% in 2022. This growth was primarily driven by increased external demand for Cambodian products and tourism services, leading to a revival in demand for food, accommodation, and local trade. Furthermore, the removal of mobility restrictions and restored confidence in travel resulted in a significant rebound in international visitor arrivals, reaching approximately 2.3 million in 2022 from a low base of around 200,000 in 2021. However, the agricultural sector experienced slower growth due to higher prices for fuel and other agricultural inputs.
While garment, footwear, and travel goods exports are projected to face challenges due to weak external demand from the United States and Europe, the industrial sector continues to benefit from policy reforms and new trade agreements. The report anticipates industrial output to grow by 5.8% in 2023, followed by an acceleration to 7.8% in 2024. Construction growth is expected to remain sluggish, while agriculture is forecasted to grow by 1.1% in 2023 and 1.2% in 2024, driven by crop production for exports.
Ms. Varma also highlighted several risks to the economic outlook, including weaker growth in the United States and Europe, high levels of private debt, lower-than-expected growth in tourist arrivals and foreign direct investment from the People's Republic of China, elevated energy prices, and extreme weather events impacting agriculture productivity.
The ADB has been actively supporting Cambodia's development, with $2.4 billion of investment projects implemented in the country and an average annual lending exceeding $350 million between 2016 and 2022.
ADB remains committed to fostering a prosperous, inclusive, resilient, and sustainable Asia-Pacific region, while persisting in its efforts to eradicate extreme poverty. Established in 1966, the organization is owned by 68 members, with 49 from the region, including Cambodia.