World Bank has recently released its economic updates in December 2019 by highlighting the most recent macroeconomic developments.
While remaining robust, the economy has eased, projected to decelerate to 7% this year. Regional growth also slowed in the first half of 2019.
Exports moderated amid weakening global demand and heightened trade policy uncertainty. Bustling construction activity, however, continued.
Investment appetite remained strong, but foreign direct investments (FDI) inflows slowed (and large proportion continued to finance construction).
Downside risks: Everything But Arms (EBA) suspension, a sharp slowdown in the Chinese economy, and potential vulnerabilities arising from prolonged construction boom.
Downside risks, arising from domestic and external factors:
Possible withdrawal of the EBA initiative;
A sharp slowdown in the Chinese economy; and
A prolonged construction and property boom and the increase of credit provided to the construction sector.
Policy approaches to manage rising risks:
A well designed fiscal stimulus to be financed by government savings will help cushion negative impacts of EBA withdrawal, if occurs;
Continue to improve external competitiveness by facilitating investment and trade and enhancing the ease of doing businesses, while advancing Cambodia’s participation in regional and global value chains (see special focus); and