World Bank Warns Cambodia’s GDP to Plunge 9% by 2050 If Climate Crisis Not Properly Addressed

• 6 November 2023
• Local News
• 2398 Views

Cambodia stands at a critical crossroads in its path to development, as an alarming report from the World Bank underscores the looming perils of climate change. The recent Cambodia Country Climate and Development Report (CCDR) released on 16 October 2023, unveils a strategic framework that is paramount in safeguarding the nation’s future. It underscores the urgency of reducing vulnerability to climate impacts, realigning emissions trajectories, and steering the economy toward environmentally sustainable avenues.

In the report’s spotlight is Cambodia’s precarious position on the frontlines of climate change, where a surge in extreme weather events has already taken a considerable toll. A poignant example is the US$100 million loss in rice production caused by the El Nino-induced droughts of 2019. In September 2022, the nation grappled with its most substantial rainfall in three years, triggering widespread flooding across 14 provinces and affecting over 85,000 households. The aftermath forced the evacuation of 5,000 households due to devastating landslides.

“In order to recover from the pandemic’s impact and the challenges posed by elevated food and energy prices, Cambodia must sustain high growth while effectively addressing climate change’s profound impact on its economy and simultaneously making resolute strides in reducing its carbon footprint,” stresses Manuela V. Ferro, the World Bank Vice President for East Asia and Pacific.

Despite Cambodia’s commendable economic growth, averaging 7.1% between 1995 and 2021, the World Bank’s report offers a stern caveat. It contends that these achievements are imperilled unless climate issues are earnestly confronted. The nation’s ambitious goals of achieving upper middle-income status by 2030 may remain unrealised without resolute climate action. The report warns of a potential 9% GDP downturn by 2050 and a troubling surge in the poverty rate by as much as 6 percentage points by 2040.

Several factors underpin these concerns, including trade-related regulatory hurdles, inadequate trade infrastructure, limited domestic investment, diminishing public capital investment, and rising private debt. Additionally, Cambodia’s economy remains exposed to external shocks due to its limited diversification in terms of exports, markets, sectors, and financing sources.

Mariam Sherman, World Bank Country Director for Myanmar, Cambodia, and Lao PDR, offers an insightful perspective, stating, “Cambodia’s economic vulnerabilities are further heightened by climate impacts, which add layers of complexity to an already intricate development landscape. Floods alone are projected to bring about increased losses to factories, roads, housing, and schools, disrupting critical services and supply chains.”

The CCDR report underscores the pressing need for concerted efforts by the government and the private sector. It urges government-led initiatives to enhance the climate resilience of existing infrastructure, including vital road networks and educational and healthcare facilities. Simultaneously, the private sector is encouraged to channel investments into climate-responsive measures such as energy-efficient cooling systems and flood-resilient buildings.

• Analysis
• Economy and Finance