PHNOM PENH (Xinhua) – Due to the COVID-19 pandemic, Cambodia’s economy in 2020 is expected to register its slowest growth since 1994, contracting by between -1 per cent and -2.9 per cent, according to the World Bank’s latest Economic Update for Cambodia.
Titled Cambodia in the Time of COVID-19, the biannual report said the COVID-19 pandemic is hitting Cambodia’s main drivers of economic growth – tourism, manufacturing exports, and construction – which together account for more than 70 per cent of the country’s growth and almost 40 per cent of paid employment.
Poverty in 2020 could increase among households involved in key sectors like tourism, construction, trade, manufacturing and the garment industry by between 3 to 11 percentage points higher than at baseline, or in the absence of COVID-19, the report said, adding that the fiscal deficit could reach its highest level in 22 years.
It said the collapse of growth drivers has hurt economic growth and put at least 1.76 million jobs at risks.
The report also warns that capital inflows are tapering off, which in turn is triggering the easing of real estate market prices, likely ending the construction boom.
It added that with the current large outstanding credit to the construction, real estate, and mortgage sector, non-performing loans could rise.
In response to the COVID-19 shock, the report recommends policy options that aim at providing urgent economic relief and public health protection in the immediate term, underpinning an economic recovery in the short term, and fostering macro-fiscal and social resilience in the medium term.
“The global shock triggered by the COVID-19 pandemic has significantly impacted Cambodia’s economy,” World Bank country manager for Cambodia Inguna Dobraja said in a press release.
“The World Bank is committed to helping Cambodia deal effectively with the COVID-19 crisis and strengthen the economy for recovery and future resilience,” she added.
The report also included a special focus section on the importance of quality of education as a key to human development and sustainable growth in Cambodia.
The special focus also highlighted key policy recommendations to improve the quality of education in Cambodia such as strengthening accountability in public schools, linking salary increase and promotion to performance, and further upgrading the capacity and quality of teachers.