The Cambodia Poverty Assessment 2022: Toward a More Inclusive and Resilient Cambodia shows the country has made remarkable progress in reducing poverty over the past decade, but that some recent gains have been threatened by the impact of the COVID-19 pandemic on the economy.
The report relies on new poverty lines, based on the Cambodia Socio-Economic Survey (CSES) 2019-20, in which the Royal Government of Cambodia set the national minimum at 10,951 riel per person per day.
The Cambodia Poverty Assessment 2022 draws on a wide range of information to evaluate the trends and drivers of poverty reduction, the effects of COVID-19 on socioeconomic outcomes, and the distributional implications of the Cambodian fiscal system in 2019. Sources include the CSES conducted by the Cambodia National Institute of Statistics, Cambodia High-Frequency Phone Surveys, the Cambodia Demographic and Health Survey 2021-22, and administrative data from various government ministries, departments, and agencies.
Key findings:
- Cambodia’s national poverty rate fell by almost half between 2009 and 2019, but the COVID-19 pandemic has recently reversed some of the progress made.
- COVID-19 exposed Cambodia’s pre-existing economic vulnerabilities. Many Cambodian households were in a precarious position before the pandemic
- Cambodia’s rapid economic growth from 2009 to 2019, combined with structural change, helped to increase labor earnings and to reduce poverty.
- Living standards have improved, helping Cambodia to narrow urban-rural gaps; but low-income and rural households still lag behind in access to basic services and earning opportunities.
- Cambodia’s remarkable economic growth and poverty reduction took place in an environment characterized by macroeconomic stability and prudent fiscal management.
- Cambodia’s growing economy has sustained high employment rates and income growth, while slower population growth has further helped boost per capita incomes.
- Structural transformation has been crucial to the success in poverty reduction. Investment and trade spurred Cambodia’s structural transformation away from agriculture towards higher value-added activities.
- Cambodian workers are moving from agriculture to jobs in manufacturing and services, sectors with higher productivity and better wages. Workers are not only moving across sectors, but also from rural areas to towns and cities. The growth in non-farm labor earnings is the chief factor in poverty reduction.
- During COVID-19, the government used the existing “IDPoor” registry to deliver relief cash transfers to registered households. Cash transfers provided valuable income support to poor households during the pandemic and curbed the increase in poverty and inequality. Although assistance was rapidly scaled up, there is room for improvement in cash transfer coverage.
Cambodia’s policy makers have several risks, challenges and opportunities to consider:
- Households face increased risk of poverty despite economic recovery.
- Development challenges include geographic disparities in poverty and overall low human development.
- Moderate productivity and an insufficiently diversified economy could reduce long-term growth and poverty reduction potential.
- Deeper structural change and a demographic transition would spur growth, provided investment is made in people and firms today.
Policy Recommendations
Interventions to support a more inclusive and resilient recovery should focus on five areas:
- Further leveraging cash transfers to deliver immediate relief to households, and their support longer-term recovery and resilience.
- Strengthening Cambodia’s post-pandemic social protection system and developing an adaptive system for future crises.
- Improving human capital through health and education investments.
- Diversifying Cambodia’s growth model.
- Strengthening the redistributive effect of fiscal policy, and financing poverty reduction strategies sustainably...