World Bank Sees Cambodia and Philippines as Fastest Growing Developing ASEAN Economies This Year

The World Bank forecast Monday that GDP in Cambodia and the Philippines would expand by 5.8 percent this year, making the two countries the fastest growing developing economies in Southeast Asia.

In its latest economic update for East Asia and the Pacific, the bank revised upwards its October growth forecasts of 5.5 percent for Cambodia and 5.6 percent for the Philippines.

It also upgraded its forecast for Vietnam from 4.7 percent to 5.5 percent, making it the third-fastest growing economy among ASEAN’s eight developing members.

But the bank revised downwards its forecasts for China from 5.1 percent to 4.5 percent, and Indonesia from 5.0 percent to 4.9 percent.

Among other developing ASEAN economies, forecasts were upgraded from 3.9 percent to 4.3 percent for Malaysia and from 3.7 percent to 4.0 percent for Laos. But forecasts were cut from 3.4 percent to 2.8 percent for Thailand and from 3.0 percent to 1.3 percent for Myanmar.


While output per capita has surpassed pre-Covid
levels in most of the larger East Asia and Pacific developing economies, ‘recovery has been uneven across the region,’ the update said.

The bank said per-capita output in China and Vietnam already exceeded pre-pandemic levels in 2020.

By the end of 2022, they were joined by Cambodia, Indonesia, Laos and Malaysia. The Philippines and Thailand were estimated to have exceeded pre-Covid levels only at the end of 2023.


On inflation, the bank said consumer prices had been falling across the region ‘in response to lower commodity prices, easing supply constraints and decelerating domestic demand.’

But inflation has stayed ‘stubbornly high’ in some countries including Laos and Myanmar – reflecting higher prices of commodities like rice, high dependence on imports or rapid currency depreciation.

‘Countries such as Thailand, China and Cambodia are now experiencing negative inflation,’ it said.

The bank said China’s importance as a destination for value-added expo
rts from the region had ‘significantly increased’ since the early 2020s – especially for Laos, Malaysia, Thailand and Vietnam.

‘Several countries in the region are also exposed through trade linkages to economic activity in the US and EU,’ it said, pointing to Cambodia, Malaysia, the Philippines, Thailand and Vietnam.

‘Further growth downgrades in these destination economies would negatively affect demand,’ it warned.


On tourism, the bank noted a ‘slower-than-expected and uneven recovery’, partly reflecting the slow revival from China and Japan.

Airline passenger arrivals indicate that tourist arrivals from China remained at half their pre-pandemic in November last year.

Although still lagging pre-pandemic levels, passenger arrivals from other markets showed faster recovery – 72 percent from Japan, 80 percent from the EU, and around 90 percent from Australia, South Korea New Zealand, and intra-region travel.

‘Elevated travel costs driven by higher airfares and a
lso exchange rate depreciation in some countries may have eroded purchasing power for the region’s travelers, negatively affecting their discretionary spending on tourist activities,’ the bank said.

At the same time, currencies such as the Chinese yuan and Japanese yen have depreciated against the dollar, “and some anecdotal evidence suggests that could also have affected outbound tourism expenses.”


In addition, the tourism sector has been affected by labor shortages, underpinned by the slow return of both local and immigrant workers.

‘Cambodia, Malaysia, and Thailand report staffing gaps, particularly for skilled roles like chefs and upper-level managers,’ the bank said.

‘Some laid-off workers have not returned, and training institutes struggle to fill positions in high-end establishments, some of which require years of experience.

‘Staff shortages persist in middle-management roles, with former tourism workers finding better prospects in other i
ndustries or neighbouring markets.’

Source: Agence Kampuchea Presse