Cambodia's economic activity showed signs of improvement in the first quarter of 2024, driven by a resurgence in services and goods exports, despite weak domestic demand, according to the World Bank's Cambodia Economic Update released today.
Economic growth is projected to increase slightly to 5.8% in 2024 from 5.6% in 2023. The growth rate is expected to further rise to 6.1% in 2025 and 6.4% in 2026, supported by a recovery in garment, travel goods, footwear exports, and tourism.
"To sustain economic growth, Cambodia needs to maintain macro-financial stability by restoring fiscal space and safeguarding its financial sector,” said World Bank Country Manager for Cambodia Maryam Salim. “Cambodia can also strengthen competitiveness by improving the business climate, streamlining trade procedures at borders, making the energy supply more reliable, and strengthening education."
International tourist arrivals improved significantly in the first quarter of 2024, reaching 84% of pre-pandemic levels. Exports of garments, travel goods, and footwear saw a rebound while non-garment exports, particularly agricultural commodities, remained strong. The ASEAN region has become Cambodia's second-largest export market after the United States. Rising foreign investment in manufacturing and agriculture also contributed to this recovery.
Inflation dropped to zero in March as food prices slowed down. Additionally, the current account recorded an unprecedented surplus in 2023 due to a narrowed trade deficit and increased tourism receipts.
However, construction activity remains sluggish amid ongoing property market corrections. This has led to a significant slowdown in domestic credit growth, affecting private consumption and domestic revenue collection.
A special focus section of the report discusses how Cambodia can enhance its education system to improve worker skills and productivity. Recommendations include increasing investment in early childhood and primary education, enhancing teacher effectiveness, and ensuring more equitable distribution of resources.