Garment sector rebound to help Cambodia's growth in 2024, 2025: AMRO

The economy is expected to continue its gradual recovery path with projected growth of 5.6 per cent in 2024 and 5.9 per cent in 2025, the report said.

Cambodia’s economy continued to recover in 2023, but at a slightly weaker pace of 5 per cent, it said.

The recovery was backed by the services sector as well as the non-garment manufacturing sector, notably exports on solar panels, vehicle parts and electrical parts.

The non-garment manufacturing sector is expected to sustain its strong growth momentum as well, supported by stable foreign direct investment (FDI) inflows.

Consumer price index-based (CPI) inflation is expected to rise to 2.2 per cent this year and 2.3 per cent in 2025 due to higher domestic demand and a possible rebound in energy prices. CPI inflation is expected to gradually approach the pre-pandemic trend.

The country’s current account turned into a surplus of 1.3 per cent of gross domestic product (GDP) in 2023, primarily reflecting a significant reduction in the trade deficit. The trade deficit narrowed to 6.9 percent of GDP in 2023, significantly lower than the historical average. This reduction was largely driven by a decline in imports.

The government should prioritise implementing its fiscal consolidation plan to rebuild policy space, the report suggested.

The central bank should resume its post-COVID normalisation of forbearance policies in 2025, the country’s growth potential and competitiveness should be enhanced through infrastructure development, digitalisation, economic diversification and by lowering logistic costs, it added.

Fibre2Fashion News Desk (DS)