IMF predicts Cambodia's GDP growth rate may fall to -1.5%

The COVID-19 has led to a global economic slowdown, and Cambodia is no exception. The International Monetary Fund (IMF) predicts that Cambodia ’s GDP will show negative growth this year, falling to -1.5%.

Cambodia has maintained a high growth rate of more than 7% in the past ten years. Even if it slows down in 2019, the GDP growth rate will still be around 7%.

In the beginning of 2020, the COVID-19 has raged across the world. All countries are facing the biggest challenge since the financial crisis in 2009. Cambodia, which is highly dependent on foreign investment, has also suffered.

The Asian Development Bank (ADB) had estimated that Cambodia ’s economic growth could reach 6.8% in 2020, the World Bank ’s forecast growth rate was 6.9%, and the National Bank of Cambodia release a more optimistic forecast, which predicted that Cambodia ’s economic growth could reach 7% in 2020. In February this year, Prime Minister Hun Sen said that due to the impact of the COVID-19, Cambodia ’s economic growth rate this year may not be able to meet the original goal, but he expected to slow down to about 6%.

However, the pandemic did not end in a short period of time, and even continued to spread beyond the imagination, the number of infections and deaths continued to rise, more and more countries began to lockdown the country, economic activities were forced to suspend, and the economies of various countries were facing huge challenges. Developed countries are not exception. Even China, where the pandemic has been brought under control, had a GDP score of -6.8% in the first quarter, the lowest since the economic reform and open up policy.

The global economic loss is inevitable. The International Monetary Fund (IMF) predicts that the global economy will shrink by 3% this year, which will be the largest since the Great Depression in the 1930s. The financial crisis caused the global economic contraction in 2009 to be 0.7 %, The impact of the pandemic is evident. Against the backdrop of the global economic depression, the IMF predicts that Cambodia ’s GDP will grow negatively in 2020, falling to -1.5%.

More than Cambodia, many ASEAN countries will face negative economic growth, including Thailand, Malaysia, Philippines, Vietnam and other countries. The pillar industries in the ASEAN region are tourism, trade and manufacturing. These industries are most directly affected by the pandemic, and the economic impact is even greater.

Although Cambodia is a traditional agricultural country, it is still tourism, construction and export trade that are driving the economy. In addition to the controllable impact of the construction sector, Cambodia ’s tourism and textile exports have suffered unprecedented impacts. If the global pandemic is not controlled, the Cambodian economy will be difficult to recover in the short term.

The IMF also predicts that if the pandemic controlled in the second half of the year and vaccines can be widely vaccinated, the global economy and the Cambodian economy may stop the plunge and return to a reasonable level, with growth rates reaching 5.8% and 6.1%.