Cambodian economy stabilising with rise in liquidity, exports

Titled ‘Economic Snapshot and Outlook 2024’, the report says the positive outlook for this year and beyond follows a significant slowdown that dampened growth and domestic demand beginning mid-2022.

Recent trends in garment, textiles and footwear exports, which saw a 19 per cent year-on-year increase in the first seven months this year, were also positive signs for an overall economic recovery in 2024. The sector, however, remains ‘somewhat volatile’, the report noted.

Global financial tightening had caused a significant reduction of liquidity in the country’s financial sector in recent times.

This tightening led to stagnation in new loan growth by Cambodia-based banks and financiers, and such reduced incoming capital muted domestic demand, the report noted.

The period also witnessed a rise in non-performing loan rates as well as high rates of loan arrears, further reducing new lending, domestic media outlets reported citing the document.

However, the MCS report said the liquidity situation is improving this year.

The interest rate cycle has already peaked in the banking sector. However, while a significant proportion of lenders remain focused on pre-existing loan repayments as opposed to new loans acquisition, credit growth is likely to remain subdued in upcoming periods due to limited new uptake.

Loan arrears also remain high; as of mid-2024, one in 13 lenders was behind on loan repayments and in arrears for more than 30 days. However, this statistics is predicted to improve in the second half of the year and beyond as household income strengthens, alongside falling interest rates.

Customer deposits are also rising again in recent periods, growing by an annualised 20 per cent in the first half this year.

Fibre2Fashion News Desk (DS)