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publication December 9, 2021

Cambodia Country Economic Update, December 2021: Living with COVID-19

Key Findings

  •         Cambodia is now living with COVID-19. Since November 2021, the authorities have relaxed travel restrictions, “reopening” the country for business, while continuing to strictly enforce protective health measures.
  •         Real gross domestic product (GDP) is projected to grow 2.2 percent this year due to a resurgence of COVID-19 cases, which slowed the recovery, especially of the tourism, wholesale, and retail sectors during the second and third quarters of 2021.
  •         Traditional growth drivers, especially the garment, travel goods, footwear, and bicycle manufacturing industries, as well as agriculture, continue to underpin the economic recovery.
  •         The electrical, electronic, and vehicle parts manufacturing industries are gradually emerging, while the agroprocessing industries, in particular food and wood processing, and furniture are also picking up.
  •         Despite a recovery of manufacturing exports and an expansion of agricultural commodity exports, the trade deficit has widened significantly.
  •         Financial conditions continued to be accommodative, supported by a relaxation of monetary policy.
  •         As of October 2021, 678,459 households or 19 percent of all households, have received the cash transfer from the government.
  •         Poverty continues to remain higher than pre-pandemic, given that employment has yet to return to pre-pandemic levels and the negative impacts of the pandemic on non-farm family businesses remain substantial, caused mainly by weak consumer demand.
  •          The economy is expected to continue to recover amid a rollback of COVID-19-related restrictions. Real GDP growth is projected to reach 4.5 percent in 2022.
  •         Risks remain tilted to the downside. The coronavirus continues to be unpredictable. A slowdown in global demand could hurt export-oriented sectors of the economy, while the tourism sector may recover even more slowly than expected, as consumers may remain reluctant to travel far distances despite eased travel restrictions. In addition, high credit growth and concentration of domestic credit in the construction and real estate sector remain a key risk to Cambodia’s financial stability.

Policy options

To jump start economic recovery, Cambodia needs an enabling environment that will allow the drivers of growth to accelerate. Key reforms could include:

  •  clear rules and regulations on living with COVID-19 under the “new normal”.
  •  regulatory and fiscal measures that support revival in the tourism sector, and
  •  prompt introduction of regulations to implement the new investment law.

As the economic recovery takes shape, Cambodia can then start rebuilding its fiscal space.

And continue to monitor asset quality and improve confidence in the banking system.



At last it’s time to go back to school Or School closures caused a large loss of learning in the country

Key highlights for Special Focus

  •         Cambodia’s success in rolling out its vaccination program has allowed the country to reopen its schools after being closed for a long time during the COVID-19 pandemic.
  •         The country experienced a massive loss of learning, compounding an already grim learning crisis, because schools were closed for such a long time during the pandemic.
  •          Despite the wide variety of remote learning programs on offer, many students could not or did not use them. Students who missed out, or worse will drop out, will earn less in their lifetimes than they otherwise would have.
  •         Cambodia’s immediate need is twofold: safely and effectively reopen schools while simultaneously improving the remote learning system in case schools are forced to shut down again.
  •         MoEYS has introduced robust safety and hygiene protocols in schools. Administrators and teachers must ensure they are enforced. Any community spread in schools would most likely result in another closure.
  •         And, of course, teachers and administrators must return to the all-important task of educating students. They need to act quickly to prevent dropouts, assess student learning, and implement new techniques for learning recovery to get students back on track.
  •         Meanwhile, Cambodia needs to retain and strengthen its remote learning infrastructure, which are necessary for the new rotational system for the cohort not in class on any given day.
  •         In the future, when all students can return to school every day of the week, the remote learning channels can supplement in-person learning. And they can yet again become the primary means of teaching in case of another school closure.
  •         The first step in moving forward is determining where students stand, based by administering systematic learning tests. Learning assessments in the classroom will enable teachers to adjust their instruction and provide constructive feedback to students.
  •          It is important to further increase in-person class time at all grade levels to make up learning losses.
  •         Despite recent increases to support teacher salaries, budget allocations to public education remain relatively low, while performance is not adequately monitored.