More positive outlook for Kingdom’s economy

October 16, 2020, Sorn Sarath / Khmer Times 

Global financial institutions have provided a more positive outlook for Cambodia’s economic outlook because the country has been far less affected by COVID-19 than others.

Cambodia’s Ministry of Economy and Finance (MEF) claimed that the prediction is based at least in part on the government’s comprehensive anti-COVID efforts.

The World Bank’s October 2020 Economic Update for East Asia and the Pacific projected a contraction of negative 2 percent for Cambodia’s economy this year.

The Asian Development Bank (ADB) revised its 2020 growth forecast, predicting Cambodia’s economy will contract 4 percent, from its previous prediction of a 5.4 percent contraction in June, because of improved agricultural performance and increased volume of non-garment manufacturing.

Now, in its World Economic Outlook, the International Monetary Fund (IMF) projects that the Kingdom’s economy is forecast to shrink just 2.8 percent this year.

The above international financial institutions have predicted Cambodia’s economic growth at 4.3 per cent, 5.9 per cent and 6.8 per cent respectively for 2021.

A Ministry of Economy and Finance (MEF) spokesman, Meas Soksensan, said that despite the pandemic, the government predicts the country’ economic growth will contract just 1.9 percent.

“The global financial institutions always adjust the prediction according to the situation but  the government’s official figure currently remains at minus 1.9 per cent but we may adjust it  at the end of the year,” he said.

He added the government’s measures to contain the COVID-19 pandemic and create business incentives for some sectors would be key factors for more positive movement.

“We need to recognise the government’s efforts. The government has released stimulus packages for many phases during this pandemic and this money is used on target, so this provides a positive outlook on the economy.”

In a double-whammy, the pandemic, which has left hundreds of thousands unemployed, and the country being hit by devastating and fatal flash floods, has created stress, especially for farmers. The heavy rain has affected 48,317 families – 193,268 people.

A report by the National Committee for Disaster Management shows that, as of Oct 15, the floods affected 131,329 hectares of rice fields, of which 6,657 have been damaged.

Soksensan said the floods were another burden for the government to address urgently.

However, he said the government has annually reserved a national budget package for the relief of natural disasters such as floods.

“For any impact on the economy caused by floods, we have yet to make any assumption now but it could affect the poverty rate. We need to wait to see the revised poverty rate from the Ministry of Planning in due time,” he said.

The impact of the pandemic, could cause the Kingdom’s poverty and unemployment rate to nearly double to 17.6 percent and 4.8 percent respectively, according to the United Nations Development Programme economic and social impact assessment of COVID-19 in Cambodia. However, the report shows that with the government’s social protection stimulus, gross domestic product contraction would be minus 3.3 percent, lessening the impact on unemployment and poverty to 4.4 percent and 14.2 percent, respectively.

The government has already been sending out nearly $30 million a month since June to support increasing vulnerable and unemployed workers.