The ASEAN+3 Macroeconomic Research Office (AMRO) yesterday revised upwards Cambodia’s GDP growth rate to 5 percent in its October quarterly update, from 4.9 percent in its July quarterly update.
However, the regional macroeconomic surveillance organisation revised downwards the Kingdom’s economic growth expectations for next year to 5.4 percent, from its July growth estimates of 5.8 percent.
While talking about the inflation projections for the country, it said the Consumer Price Index (CPI) in the country is set to decrease to 5.3 percent this year, down from its July estimates of 6.4 percent.
The CPI for next year is estimated to be 3 percent, down from its earlier prediction of 4.4 percent.
While talking about the growth expectations of Cambodia, AMRO chief economist Dr Hoe Ee Khor told Khmer Times: “Cambodia’s economy is expected to grow at a faster pace of 5.0 percent in 2022 on the back of robust external demand and a resumption in tourism and domestic activity.”
He said the hotel and restaurant sectors are expected to rebound strongly next year.
“For 2023, Cambodia will see stronger growth in the services sector with the recovery of tourism, while the manufacturing sector could be affected by the lower global growth. In particular, the hotel and restaurant sectors are expected to rebound strongly, benefitting from robust growth in neighbouring economies such as Vietnam and Thailand.”
Earlier, addressing an online press conference, Dr Khor said: “A simultaneous economic slowdown in the United States and euro area, in conjunction with tightening global financial conditions, would have negative spillover effects for the region through trade and financial channels.”
AMRO revised downwards its short-term growth forecast for the ASEAN+3 region.
The continuing strict dynamic zero-COVID policy and real estate sector weakness in China and potential recessions in the United States and the euro area are weighing on the region’s outlook, it said.
In its October Update, AMRO staff forecasts the ASEAN+3 region to grow by 3.7 percent this year — down from the 4.3 percent growth projected in July reflecting mainly weaker growth in Plus-3 countries.
The ASEAN region is expected to grow strongly by 5.3 percent.
The region’s inflation rate for 2022 is now projected to be 6.2 percent — a full percentage point higher than previously forecast, it said in a release.
Growth is expected to increase to 4.6 percent in 2023 as China’s economy picks up, with inflation moderating to about 3.4 percent.
The prolonged war In Ukraine is deepening Europe’s energy crisis, pushing it closer to recession. In the United States, aggressive monetary tightening to fight persistently high inflation is intensifying fears of a hard landing, the report pointed out.
It said inflation is accelerating in ASEAN+3. Food and fuel prices remain elevated despite recent easing in key global commodity benchmarks. Subsidy cuts in some economies and
depreciating currencies have also pushed prices higher.
“Central banks in the region are raising policy interest rates to safeguard price stability and support their currencies. However, the pace of monetary tightening has generally been more measured and gradual than in the United States and the euro area,” Dr Khor added.
The report said economic reopening gained further traction in the third quarter of 2022, despite a brief surge in new infections in July. The surge was mostly in Japan and Korea.
“The prolonged war in Ukraine — now in its eighth month — is deepening Europe’s energy crisis, pushing it closer to recession as energy shortages and soaring prices hit economic activities. In the United States, aggressive monetary tightening to fight stubbornly high inflation — the US Federal Reserve hiked its benchmark rate by 75 basis points in July and again in September, for a total of 150 basis points — is intensifying fears of a hard landing,” it cautioned.
While pointing out that the ASEAN+3 exports have held up well so far, it warned about the strong headwinds. “The region’s exports have expanded somewhat since April, helped by easing global supply chain disruptions and favourable prices for its goods (particularly commodities). However, weakening demand in the United States and Europe, as well as in China, is likely to hold back the pace of expansion. The July-August Purchasing Managers’ Index for new export orders points to a softening in global demand for key exports like electronics, automobiles and auto parts, and machinery and equipment,” the report said.
It pointed out that the ASEAN+3 central banks are tightening monetary policy to curb inflation and support currencies. “Following the US Federal Reserve’s September rate hike, several central banks in the region followed suit, pushing up rates by 50-100 basis points to curb inflationary pressure and help ease downward pressure on their currencies. The Bank of Japan intervened in the market for the first time to prop up the yen,” it added.
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