Cambodia Economic Outlook
Growth accelerated to 5.1% last year according to Central Bank estimates. The manufacturing sector expanded by 9.4% and exports by 19.8%. Additionally, tourism revenues and remittances posted strong growth. The Central Bank cited the government’s management of the Covid-19 pandemic as one of the reasons for last year’s growth rate—which will have been one of the highest in ASEAN according to our projections. Moreover, the opening of the Phnom Penh-Sihanoukville expressway, a trade agreement with South Korea and new funding from the Asian Development Bank and the World Bank boosted growth in Q4 and will continue to do so this year. In politics, the recent CPP ruling party congress resulted in increased support for social protection and the agricultural sector. This bodes well for private consumption and investment but will likely increase the fiscal deficit.
Inflation decelerated in December to 2.9% (November: 3.2%), driven by lower price pressures for food, clothing and restaurants. Inflation will fall markedly in 2023 on an appreciating currency and moderating commodity prices and supply chain bottlenecks. Strong demand, China’s reopening and potential floods are factors to watch.