PHNOM PENH, December 13, 2024- Economic activity held steady in Cambodia in 2024, with external demand driving a revival in exports, despite uneven performance across sectors.
According to the World Bank's Cambodia Economic Update: From Recovery to Resilience: Harnessing Tourism and Trade as Drivers of Growth, released on December 12, 2024, economic growth is projected to reach 5.3 percent this year, up from 5.0 percent in 2023, driven mainly by trade. A surge in manufacturing exports, combined with a partial recovery in tourism and continued foreign investment, helped sustain economic activity.
"Cambodia can further boost its growth by diversifying trade and improving productivity" said World Bank Country Manager for Cambodia, Tania Meyer. "Investing in human capital, in particular education, and deepening reforms to improve the business environment will be key to enable the private sector to create more and better jobs".
The number of international tourist arrivals reached pre-COVID-19 levels. However, tourist spending remains much lower than it was in 2019, because of less arrivals from high-spending countries. At the same time, domestic consumption is dampened by subdued credit growth and high household debt.
These indicators reveal the need to build on ongoing improvements in fiscal management, with reforms that boost domestic revenue mobilization a top priority to support social spending and public investment. The report also recommends that Cambodia diversifies its exports of both goods, especially manufactured and processed agricultural products, and services, particularly travel and hospitality, in order to reduce vulnerability to external shocks.
A special focus section explores how Cambodia can improve productivity to sustain economic growth and achieve its vision of becoming a high-income country by 2050. Recommendations include accelerating structural transformation, promoting modernization and digitalization, and addressing critical business environment challenges.
