Developing Asia Economies Set to Grow 5.2% this Year Amid Global Uncertainty
The beginning of this year already feels like it happened a decade ago. Cambodia had just reopened its doors to tourism and the world was gradually moving over to a policy of “living with Covid”. No one really knew what the future held, but there was tentative optimism. What choice did we have after all? But Cambodia’s experience over 2022 has at least borne some of that optimism out. And it looks as though we have ground for even further optimism going into 2023.
This December, the World Bank revised Cambodia’s economic growth levels for the year upwards to 4.8%. According to their report, Cambodia’s garment industry, travel goods and footwear exports showed resilience, while the services sector, especially travel and tourism, has also done well. As a result, business and consumer confidence have risen and both domestic and foreign investment have increased. While this is a fraction of Cambodia’s historic highs, it still puts the country ahead of much of the rest of the world. Global growth is projected to reach 3.2% for this year, “the weakest growth profile since 2001” not including the financial crash of 2008 and the early, acute phase of the Covid pandemic. So while larger countries are slowing down, Cambodia is maintaining its traditional trend of gearing up despite strong negative external factors such as the ongoing conflict in Europe, and the US’s and China’s faltering economies.
That upward trend is set to continue for 2023, where Cambodia is predicted to hit growth levels of 5.3%. That trend may receive a further boost from a $274-million credit earmarked for Cambodia by the World Bank in order to “promote a resilient recovery” from recent economic turbulence. The support is expressly intended to support economic reforms that “will boost growth and strengthen Cambodia’s resilience”, including those that will promote competition, streamline administration and expand access to finance.
In Cambodia’s favour, tourism is showing strong signs of recovery, with over 1¼ million arrivals in the first nine months of this year, almost seven times more than the dismal equivalent period in 2021. This third-quarter figure already outpaces predictions made in May for the entire year by 25%.
A key driver for tourism’s recovery will be the relaunch and introduction of key air routes with countries like Japan and India, among others. This undertaking received a boost last month with the announcement by AirAsia of a new joint-venture agreement for the creation of a new low-cost airline in the country.