Cambodia’s Stronger Growth Highlighted in New World Bank’s Report

Cambodia is a small nation, but its economy will continue to grow, according to a new World Bank's report entitled January 2018 Global Economic Prospects report released today.

Smaller Asian economies continued to benefit from robust growth in China and India, including resurging trade and substantial infrastructure investment e.g., Afghanistan, Cambodia, Maldives, Sri Lanka, it said.

In Cambodia, stronger growth in emerging manufacturing exports such as auto parts, electrical appliances and robust tourist revenues partly offset a slower growth in garment exports, added the report.

Cambodia is expected to maintain rapid expansion, supported by trade and Foreign Direct Investment inflows, it underlined.

The same source stated that potential growth in Cambodia, Lao PDR, and Vietnam, three economies closely linked to China, remained high in 2013-17 around 6 percent in Vietnam and around 7 percent in Cambodia and Lao PDR. But, these rates are below longer-term averages and reflect the limitations of growth driven by foreign inflows Cambodia, natural resources (Lao PDR), and public spending Vietnam.

Notwithstanding these regional demographic trends, many countries, including Malaysia, the Philippines, and Cambodia, continue to enjoy rising working-age populations.

Despite this overall regional trend, many regional economies are still enjoying the demographic dividend from rapid labour supply growth (e.g., Cambodia, Indonesia, Malaysia, Myanmar, Lao PDR, and Papua New Guinea, and the Philippines; World Bank 2015c). While this supports potential growth, rapidly growing populations in lower-income countries pose other challenges, including providing adequate public service delivery.

This potential growth slowdown reflects ongoing demographic trends that are dampening labour supply, slowing productivity growth and putting the region at risks of becoming old before becoming rich. The largest declines in the share of the working-age population are expected in China. In contrast, many countries, including Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, and Papua New Guinea, and the Philippines, will see a rise in working-age populations and could enjoy a demographic dividend if they generate sufficient jobs.

For investment into technological and physical capital, several countries in the region continue to have sizable infrastructure investment needs. Such investment can be financed by raising additional revenue (e.g., Cambodia, Indonesia, Lao PDR, the Philippines), reducing reliance on resource revenues (e.g., Indonesia, Malaysia, Mongolia, Papua New Guinea), increasing the efficiency of public investment (Indonesia, Lao PDR, Vietnam), rebalancing public expenditures towards public investment and promoting public-private cooperation (World Bank 2011, 2015b). Developing and implementing rigorous and transparent processes for project selection, appraisal, and procurement, could make public investment more efficient and could improve operation and maintenance of assets (IMF 2017d).

Source: Agency Kampuchea Press