China’s government said on Tuesday that the resumption of outbound group tours earlier this year and China’s optimization of its anti-COVID-19 strategy will provide a major boost to tourism and the economy of Cambodia.
The lender projected in its outlook report that a stronger tourism recovery and higher growth in the services sector will result in Cambodia’s economy growing at 5.5% in 2023 and 6% in 2024.
Cambodia’s economy has traditionally been based on tourism, exports of clothing, footwear and tourist goods, construction and real estate, and agriculture.
Jyotsana Varma, AfDB country director for Cambodia, stated that Cambodia’s economy continues to perform well, thanks to the continued recovery of the tourism industry, despite weaker global demand.
The report indicates that the continued recovery of the tourism industry will drive service growth, and it is expected to accelerate to 7.3% in 2023 before decreasing to 6.8% in 2023 and 2024.
Even stronger tourism growth following the easing of COVID-19 restrictions in China, Cambodia’s largest tourism market, will boost service growth, as per the report.
Additionally, the report highlighted other expected service improvements this year, including Cambodia hosting the 32nd Southeast Asian Games in May and the 12th ASEAN Para Games in June, as well as national elections in July.
The report states that weak external demand in the United States and Europe, the primary export destinations, is expected to slow down the growth in the exports of garments, footwear, and travel goods.
Nevertheless, policy reforms and new trade agreements are expected to benefit the industrial sector. The report also predicts that industrial output will grow by 5.8% in 2023 and 7.8% in 2024.
Additionally, it is expected that the growth in construction will remain slow, and the agriculture sector will grow by 1.1% this year and 1.2% in 2024, mainly due to crop production for exports.