Cambodia’s economic growth expected to reach 7% in 2020

• 3 January 2020
• Local News
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Cambodia’s economic growth is projected to reach around 7% by 2020 due to growth in exports, foreign investment inflows, tourism, and construction and real estate, sectors which are expected to enjoy continued growth.

In a macroeconomic and banking progress outlook for 2019 and 2020 released on 02 January, the National Bank of Cambodia projects that economic growth will be based on a forecast of a favourable global economic recovery which will be favourable for exports.

Exports are expected to grow at a high rate, especially for travel goods and other manufacturing products, although garment product exports may suffer due to the EU withdrawing the EBA from Cambodia in February 2020, the report read.

Economic growth will also be supported by increasing inflows of foreign direct investment, which is expected to strongly continue.

The construction and real estate sectors will continue to grow, reflecting the ongoing trend of imports of construction materials and approved construction projects, the report went on, adding that arrivals of foreign tourists will continue to grow, especially to the coastal areas and for business purposes.

The National Bank of Cambodia, on the other hand, points out some potential risks for economic growth in 2020. External risks include a faster-than-expected slowdown in China’s economy, which could have a negative impact on Cambodia’s economy which has a close relationship with the Chinese economy and the trend of implementation of protectionism policies which would affect the country’s exports.

For internal risks, the NBC said that the potential loss of the EU EBA (“Everything-But-Arms”) initiative could directly impact the garment and other sectors that indirectly benefit from the garment sector.

Credit in the construction sector can be risky when supplies in the real estate sector exceeds demand, the NBC noted, adding that installment payments for mortgages made by construction developers has not been strictly controlled.

In 2019, economic growth continued to grow at 7.1%, with growth supported by strong exports, especially garments, footwear and travel goods, construction growth (which was reflected in the growth in imports of construction materials), and tourism with increasing numbers of foreign tourists, especially to the coastal areas and for business purposes, the report added.

The Cambodian economy continues to attract foreign direct investment, particularly in the financial, manufacturing, construction and real estate and accommodation-related sectors.

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