According to the latest report on the Cambodian economy released by the World Bank on June 6th, despite sluggish domestic demand, Cambodia's economic activity rebounded in the first quarter of this year, driven by the recovery of service and goods exports. It is expected that the economic growth rate in 2024 will slightly increase from 5.6% in 2023 to 5.8%. Stimulated by the recovery of clothing, tourism goods, and footwear exports, as well as the growth of the tourism industry, it is expected that this upward trend will continue, with growth rates of 6.1% and 6.4% in 2025 and 2026, respectively.

Maryam Salim, Country Manager of the World Bank in Cambodia

Enhance competitiveness by improving the business environment

Maryam Salim, Country Manager of the World Bank in Cambodia, said, "In order to maintain economic growth, Cambodia needs to restore fiscal space and protect the financial sector to maintain macro financial stability. Cambodia can also enhance competitiveness by improving the business environment, simplifying border trade procedures, improving energy supply reliability, and strengthening education." The report emphasizes that the number of international tourists in Cambodia has significantly increased, reaching 84% of pre pandemic levels in the first quarter of this year. In addition, exports of clothing, tourism goods, and footwear rebounded, while non clothing exports, especially agricultural exports, remained strong. The ASEAN region has become Cambodia's second largest export market after the United States, thanks to increasing foreign investment in manufacturing and agriculture.

Due to the decrease in food prices, the inflation rate in March dropped to zero, while the country's current account showed an unprecedented surplus in 2023 due to a narrowing trade deficit and an increase in tourism revenue.

Despite these positive trends, the construction industry still faces challenges as construction activity remains sluggish due to the ongoing adjustment of the real estate market. This has led to a significant slowdown in domestic credit growth, affecting private consumption and domestic taxation.

Special emphasis on the importance of strengthening the education system

The World Bank report also emphasizes the need to strengthen Cambodia's education system in order to improve human resources and productivity levels. The education landscape in Cambodia is changing in a positive direction. The primary school enrollment rate increased from 81% in 2009 to 90% in 2019. However, the path of education still faces numerous obstacles. For example, many families are unable to support their children to continue receiving secondary education due to heavy economic burdens. This requires targeted solutions to alleviate these economic pressures and pave the way for learning.

Salim emphasized, "Quality education is a key area that needs attention to achieve sustainable economic growth. Investing in early education and ensuring fair distribution of resources will help build a more skilled and productive workforce

The World Bank report emphasizes the importance of strategic investments and policy measures in maintaining and accelerating Cambodia's economic growth. By addressing key areas such as fiscal stability, business competitiveness, and education, Cambodia can build a more resilient and dynamic economy in the coming years.

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