World Bank committed to helping Cambodian economy recover from COVID-19 crisis

• 29 May 2020
• Local News
• 3057 Views

“The global shock triggered by the COVID-19 pandemic has significantly impacted Cambodia’s economy, …The World Bank is committed to helping Cambodia deal effectively with the COVID-19 crisis and strengthen the economy for recovery and future resilience.”Inguna Dobraja, World Bank Country Manager

The above statement was included in a report released by the World Bank on 29 May on how the“COVID-19 Epidemic Poses Greatest Threat to Cambodia’s Development in 30 Years.”

The COVID-19 pandemic has spread over the past few months and has already severely hit Cambodia’s major economic engines including tourism, industry, manufacturing export and construction, accounting for 70% of Cambodia’s economic growth and affecting about 40% of Cambodia’s total employment.

As a result, Cambodia’s poverty level in 2020 is likely to increase by between 3% and 11% compared to the baseline scenario in the absence of COVID-19. The increase will be attributed to the livelihoods of the families who depend on tourism, construction, trade, industry, manufacturing and garment workers.

“ …capital inflows are tapering off, which in turn is triggering the easing of real estate market prices, likely ending the construction boom.” the report warned.

The tapering of key economic engines, particularly tourism and construction, will result in the loss of about 1.76 million jobs. Both unemployed people and businesses face reduced income will lead to fiscal deficits, the highest decrease that Cambodia has seen in the past 22 years.

As a result, Cambodia’s economic growth in 2020 will slow to between -1 and -2.9%, the slowest pace since 1994.

In response to the COVID-19 crisis, the report also suggests a number of policy recommendations. For immediate measures, the World Bank proposes urgent economic relief and public health protection.

At the same time, the World Bank urges short-term economic recovery measures and strengthening macro-fiscal and social resilience in the medium term.

In addition to the above policy recommendations, the report particularly focuses on the importance of human resource development to be achieved through enhancing the quality of education for sustainable growth and social resilience in Cambodia.

Education quality improvements, which the report refers to, mean to strengthen accountability in public schools, linking salary increases and promotion to performance, and further upgrading the capacity and quality of teachers.

Two Cambodian schools that the World Bank appraised in the report are intended for policymakers to model Cambodia’s educational quality. The two schools are New Generation School and School Based Management.

• Economy and Finance