07 Oct Cambodia: One of the fastest growing economies in the world
Over the past two decades, Cambodia has undergone a significant transition, reaching lower middle-income status in 2015 and aspiring to attain upper middle-income status by 2030, according to the World Bank. Driven by garment exports and tourism, Cambodia’s economy sustained an average growth rate of 8% between 1998 and 2018, making it one of the fastest-growing economies in the world. While easing slightly, growth remained strong, estimated to have reached 7.1% in 2019, after better-than-expected growth of 7.5% in 2018. Amid the pandemic, the growth lowered to 0.2% in 2020 (expected to rise to 3.6% in 2021). However, EIU revised up its forecast for real GDP growth in 2022 to 10.5%, from 6.3% previously, based on the assumption that there will be a recovery in private consumption and investment that year.
Nestled between Thailand, Vietnam and Laos, and a part of China’s Belt and Road initiative, Cambodia will become a major part of the Southeast Asia network, which will further facilitate its growth and provide ample opportunities for business. Big development plans are in place to improve its infrastructure. And despite the need for further institutional development, the fledgling nation’s potential as an important part of the regional supply chain is assured.
According to official estimates, the poverty rate in 2014 had reduced to 13.5% compared to 47.8% in 2007. Cambodia has achieved in 2009 the Millennium Development Goal (MDG) of halving poverty. Health and education, especially their quality elements, remain important challenges and development priorities.
Key reforms are needed for Cambodia to sustain pro-poor growth, foster competitiveness, sustainably manage natural resources and improve access to and quality of public services. Cambodia continues to have a serious infrastructure gap and would benefit from greater connectivity and investments in rural and urban infrastructure. Further diversification of the economy will require fostering entrepreneurship, expanding the use of technology and building new skills to address emerging labour market needs. Accountable and responsive public institutions will also be critical to meeting the evolving needs of citizens and the private sector. And quality of human capital will be of utmost importance to achieve Cambodia’s ambitious goal of reaching middle-income status by 2030.