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publication June 16, 2021

Cambodia Country Economic Update, June 2021: Cambodia’s Economy Recovering but Uncertainties Remain

Key findings:

  • Cambodia’s economy is gradually recovering and projected to grow at 4% in 2021, after contracting by 3.1% in 2020, thanks to revitalization of global demand.
  • Agriculture remained resilient due in part to good prospects of the CCFTA. Manufacturing has gradually adapted to changing external conditions. The tourism sector continues to be hit hard.
  • Goods exports gradually adjusted, growing at 12.2% during the first four months of 2021, while the share of garment exports in total goods (excluding gold) exports declined to 45.6%.
  • FDI inflows remain resilient and have helped sustain the external sector.
  • The cash transfer scheme has seen increased demand, benefiting more than 710,000 households, or 19.5 percent of all households as of January 2021.
  • Growth outlook remains highly uncertain. The recovery is largely dependent on the course of the virus and the pace at which the vaccine can be rolled out

To weather the impacts of COVID-19, it will be important to take the following stepsၚ

  • It is urgent to accelerate implementation of the vaccination program, while continuing to effectively contain the rising infection cases and deaths.
  • Further boosting pro-poor and growth-enhancing public investment including cash-for-work projects, is critical for economic recovery.
  •  It is important to increase the coverage of the IDPoor program and develop the database for all social programs, while making social transfers more efficient, convenient, and digital.
  •  It is imperative to closely monitor vulnerabilities arising from a prolonged property boom and the increase of credit provided to the construction sector.