2023-12-31-世界银行-柬埔寨经济更新_2023年11月_从复苏到改革-特别关注_加快结构改革以提高生产力和竞争力_56页_5mb

Cambodia Economic Update - November 2023

Core Content Overview

This report provides a comprehensive analysis of Cambodia's recent economic developments and outlook for the coming years, emphasizing the need for structural reforms to boost productivity and competitiveness. It outlines the current economic situation, key challenges, and policy recommendations to ensure sustainable growth and poverty reduction.

Main Points

Recent Economic Developments

• Economic Growth Slower Than Expected: Cambodia's economic activity has slowed due to structural bottlenecks and external headwinds, such as the lingering effects of the pandemic, geopolitical tensions, and global monetary tightening.
• Tourism Recovery Limited: Although international arrivals rebounded, tourism receipts and activity remained sluggish, indicating that the sector has not fully recovered from the pandemic.
• Exports and Employment Declined: Goods exports declined by 2.0% in the first eight months of 2023, and manufacturing jobs fell by 5%, primarily in the garment, travel goods, and footwear sectors.
• FDI and Property Development: Approved FDI slowed, while property development permit values increased sharply, suggesting a shift in investment focus.
• Inflation and Exchange Rate: Inflation rose to 3.2% y/y in August 2023, and the exchange rate remained stable at 4,100 riel per USD.
• Fiscal and Monetary Policies: The fiscal deficit is expected to widen to 6.9% of GDP, while monetary policy has tightened, including raising the reserve requirement ratio to 9%.
• Credit and Money Supply: Credit growth slowed, and broad money growth decelerated to 11.0% y/y, reflecting reduced private and public investment.
• Public Revenue and Expenditure: Domestic revenue collection slowed, while government expenditures increased, partly due to public sector wage hikes and event-related spending.

Economic Outlook

• Real GDP Growth: Projected to reach 5.4% in 2023, slightly lower than the May 2023 forecast, with growth expected to rise to 5.8% and 6.1% in 2024 and 2025, respectively.
• Inflation and Current Account: Inflation is expected to moderate, and the current account deficit is projected to narrow, covering about 7 months of imports by 2023.
• Poverty Reduction: Despite lower growth, the pace of poverty reduction is expected to accelerate.

Challenges and Risks

• Global Demand and Financial Conditions: Weaker-than-expected global demand and tighter financial conditions are key risks, especially for the tradable sectors and the banking system.
• Domestic Risks: Rising household debt and continued concentration of credit in real estate pose significant financial stability risks.
• Structural Weaknesses: Limited productivity growth, weak international competitiveness, and inadequate infrastructure remain critical challenges.
• Geopolitical and Environmental Risks: Geopolitical tensions, conflict, social unrest, and climate-related natural disasters continue to pose risks to economic stability.

Key Policy Recommendations

1. Accelerate Structural Reforms: To ensure long-term sustainable growth, Cambodia must shift from factor accumulation to productivity and human capital growth.
2. Improve Business Environment: Enhancing predictability, reducing regulatory complexity, and streamlining business entry and insolvency processes are essential.
3. Upgrade Infrastructure: Significant investments are needed in energy, transport, logistics, and urban services to support economic growth and international competitiveness.
4. Strengthen Financial Stability: Intensify bank supervision, stress test institutions, and prepare for nonperforming loans. Modernize tax and customs systems and improve the insolvency regime.
5. Enhance Public Sector Performance: Reform public administration to improve service delivery, optimize organizational structures, and implement merit-based employment and performance-linked pay systems.
6. Support Tourism Sector: Reduce costs and fees (visa, accommodation, transport, etc.) and eliminate unofficial charges to attract international arrivals.
7. Expand Social Assistance: Continue and expand cash transfer programs to support vulnerable households and mitigate the impact of economic slowdowns.

Special Focus: Accelerating Structural Reforms

• Productivity and Competitiveness: Cambodia's growth has been driven by factor accumulation rather than productivity improvements. Structural reforms are needed to enhance competitiveness and productivity.
• Business Environment: Cambodia ranks low in ease of doing business and investment climate, requiring reforms to reduce costs and improve governance.
• Infrastructure Gaps: The country has a large infrastructure financing gap, particularly in transport, energy, and urban services, which must be addressed to support economic development.
• Human Capital Development: Learning outcomes and skills development are lagging, with limited access to early childhood education and poor preparation for secondary and higher education. Improving education and skills is crucial for future productivity.
• Regional Connectivity: Enhancing transport links across the region, including the East-West corridor and inland waterways, is vital for improving trade efficiency and reducing costs.

Conclusion

Cambodia's economy is transitioning from recovery to reform, with a focus on boosting productivity and competitiveness. While the country has shown resilience and partial recovery, structural challenges and external risks remain significant. Accelerating structural reforms, improving the business environment, and upgrading infrastructure and human capital are critical to ensuring sustainable growth and poverty reduction in the long term.