Published on : Friday, November 24, 2017
The economy of Cambodia is predicted to remain strong and supple for the next two years, fueled by a shift to higher value-added manufacturing despite lingering concerns over political stability and the slowed growth of both the construction tourism and garment sectors.
The robust GDP growth of Cambodia is expected to reach 6.9 percent in 2018 and remain almost as high at 6.7 percent in 2019, thanks to increased export diversification of footwear, electrical machinery and auto parts alongside healthy inflows of foreign direct investment, the World Bank said in its Cambodia Economic Update for October 2017.
However, the downside risks—including the possibility of a slowdown in the regional economy, especially from China and potential election-related uncertainties—still remain.
World Bank Country Manager for Cambodia Inguna Dobraja said that while the Kingdom appears to be on the verge of climbing up the manufacturing value chains, this change would bring new challenges to the economy.
Cambodia would need to assume the deeper structural reforms that address high electricity and logistics costs, as well as skills gaps.
The report noted that in 2012, the Kingdom of Cambodia had 46 factories dedicated to electrical machinery and auto parts, accounting for a 5.1 percent share of the manufacturing industry. As of August of this year, the number of factories had increased to 121 and accounted for 7.1 percent of manufacturing.