ADB Retains Cambodia's Growth Forecast at 5.8 Percent in 2024

"The rebound in the manufacturing sector - especially garments, footwear, and travel goods (GFT) - is powering the country's economic growth," said ADB Country Director for Cambodia Jyotsana Varma.

"Agriculture and tourism are steadily gaining ground, while continued inflows of foreign direct investment are fueling the country's economic momentum. Together, these forces are setting the stage for a promising 2024 and positioning Cambodia for robust growth in 2025 and beyond," she added.

The lender has also revised down its earlier inflation projection for 2024 from 2 percent to 0.5 percent, reflecting the slow increase in food prices and decline in fuel prices in the first half of 2024.

The lowering of inflation forecasts reflects reduced prices of fuel-related goods and services, along with decreased costs of fertilizers, providing support to agricultural production.

"This will provide much-needed relief for people, especially the most vulnerable, who have faced challenges in recent years due to rising food and fuel prices," the report said.

The report highlighted that GFT exports rose by 16.9 percent year on year in the first half of 2024, rebounding from an 18.6 percent decline during the same period in 2023.

Meanwhile, growth in exports of non-GFT products slowed to 1.3 percent year on year from 21.2 percent. Imports of construction materials and equipment surged by 23.3 percent year on year in the first half of 2024, driven by public infrastructure investment.

Agriculture is projected to grow by 1.2 percent in 2024 and 1.3 percent in 2025, the report said, adding that services are forecast to grow by 5.4 percent in 2024 before tapering to 5.2 percent in 2025.

The report added that this forecast is supported by a 22.7 percent year-on-year increase in tourist arrivals in the first half of 2024, reaching 94.8 percent of the pre-pandemic levels in the first half of 2019.

Foreign investment inflows continued although they decelerated somewhat to 2 billion U.S. dollars by mid-2024, from 2.1 billion dollars during the same period in 2023, the report said.

"This was supported by growth in nonfinancial sectors. However, investment in the financial sector slowed appreciably due to lower banking profits," the report said.

According to the report, potential risks to Cambodia's economic outlook include weaker growth in major economies including Europe and the United States, high private debt, volatile global fuel prices, and severe impact from extreme weather events.

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