Cambodia’s Economy to Accelerate on Tourism Recovery — ADB

PHNOM PENH, CAMBODIA (4 April 2023) — Cambodia’s economy is forecast to grow at 5.5% in 2023 and 6.0% in 2024 on a more robust tourism recovery and higher growth in the services sector, according to a report released today by the Asian Development Bank (ADB).

“Despite weaker global demand, Cambodia’s economy continued to perform well in 2022 led by ongoing tourism recovery,” said ADB Country Director for Cambodia Jyotsana Varma. “Cambodia’s economic outlook is positive with robust growth, shrinking current account deficit and moderate inflation in 2023.”

The Asian Development Outlook (ADO) April 2023 says the tourism sector is expected to grow 7.3% in 2023 before easing to 6.8% in 2024. Inflationary pressure is anticipated to moderate at an average rate of 3.0% in 2023 and 4.0% in 2024. Cambodia’s economic outlook also hinges on the country’s continuing efforts to scale up green investment to unlock long-term growth potential, says the report.

The ADO April 2023 report says Cambodia’s economy grew by an estimated 5.2% in 2022, owing primarily to rising external demand for Cambodian products and tourism services, which led to a revival of demand for food and accommodation, and growth in local trade, transport, and communications subsectors. With improved confidence in travel and removal of mobility restrictions, international visitor arrivals staged a strong rebound to about 2.3 million in 2022 from a low base of about 200,000 in 2021. Growth in agriculture, however, decelerated in 2022 due to higher prices for fuel and other agricultural inputs. 

Growth in exports of garments, footwear, and travel goods is projected to decelerate due to weak external demand in the United States and Europe, the main export destinations. The industrial sector, however, continues to benefit from policy reforms including the investment law 2021 which created a one-stop service for investors, and new trade agreements. 

Industrial output is expected to grow by 5.8% in 2023 before accelerating to 7.8% in 2024. Growth in construction is expected to remain slow. Agriculture is forecast to grow 1.1% this year and 1.2% in 2024, boosted by crop production for exports.

“Risks to the outlook include weaker growth in the United States and Europe, high level of private debt, less-than-expected growth of tourist arrivals and foreign direct investment from the People’s Republic of China, high energy prices, and extreme weather events affecting agriculture productivity,” added Ms. Varma.

ADB is implementing $2.4 billion of investment projects in Cambodia, with average annual lending of more than $350 million from 2016 to 2022. 

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

This was first uploaded on the ADB website.