Cambodia’s economy is expected to maintain its growth momentum in 2024, with a projected growth rate of 6.0%, according to the Asian Development Bank (ADB). This forecast is based on the assumption that the global economy will continue to recover and that Cambodia will be able to capitalize on its strengths, such as its young and growing population, its competitive labor costs, and its strategic location in Southeast Asia.
Key drivers of Cambodia’s economic growth in 2024 are expected to include:
- Sustained Tourism Recovery: Tourism is a major contributor to Cambodia’s economy, and its continued recovery is expected to drive growth in 2024. The country’s rich cultural heritage, diverse natural attractions, and improving infrastructure are likely to attract more international visitors.
- Manufacturing Sector Expansion: Cambodia’s manufacturing sector, particularly garment and footwear production, is expected to continue expanding in 2024. The country’s low labor costs and preferential trade agreements with major markets make it an attractive destination for manufacturing investments.
- Infrastructure Development: The Cambodian government’s focus on infrastructure development, including roads, railways, and ports, is expected to boost economic activity in 2024. Improved infrastructure will facilitate trade, reduce transportation costs, and attract more foreign investment.
- Regional Economic Integration: Cambodia’s participation in regional economic integration initiatives, such as the ASEAN Economic Community (AEC), is expected to provide further growth opportunities in 2024. These initiatives aim to reduce trade barriers and promote economic cooperation among Southeast Asian countries.
However, there are also potential challenges that could affect Cambodia’s economic outlook in 2024:
- Global Economic Uncertainty: The global economic outlook remains uncertain, with potential risks from geopolitical tensions, supply chain disruptions, and rising inflation. A slowdown in global growth could negatively impact Cambodia’s export-oriented sectors.
- Domestic Inflationary Pressures: Inflationary pressures may persist in 2024 due to rising energy and food prices. This could erode consumer purchasing power and dampen domestic demand.
- Skills Gap and Labor Productivity: Cambodia’s workforce needs to be upskilled to meet the demands of a more diversified and technology-driven economy. Improving labor productivity is crucial for sustaining long-term economic growth.
Overall, the Cambodian economy is expected to maintain its growth trajectory in 2024, driven by a sustained tourism recovery, manufacturing sector expansion, infrastructure development, and regional economic integration. However, the country needs to address potential challenges such as global economic uncertainty, domestic inflationary pressures, and skills gap to ensure sustainable and inclusive growth.
