The head of the Asian Development Bank (ADB) says Cambodia needs to focus on its struggling industries and improve overall productivity to drive a sustainable recovery from last year’s minus 3.1 percent in gross domestic product (GDP).
The bank cut its forecast for 2021 growth last week to 1.9 percent from a 4 percent forecast in April but left next year’s outlook at 5.5 percent.
The bank says a return to pre-Coronavirus levels of an average 7 percent growth is achievable with the right policies.
Cambodia has been closed to tourists this year. The sector contributed nearly 33 percent to the economy’s growth in 2019 falling to 3 percent last year. Sources have told Khmer Times the government is likely to announce a November reopening soon, with a seven-day quarantine for tourists. That may add a lot to 2022 growth but ADB president Masatsugu Asakawa said an overemphasis on tourism may lead to a bumpy recovery.
“Tourism accounts for a great amount of GDP so there is a higher level of contribution by tourism but compared with the Pacific Islands and countries such as Thailand the dependence on tourism is not that big,” Asakawa said at a media briefing in Tokyo.
“I’ve talked about a slow recovery in tourism and of course I hope for a quick recovery for Cambodia but a non-tourism, diversified industry-sector base is available, so those non-tourism sectors need to recover to bottom-up the whole economy in an inclusive, sustainable and resilient way,” he said.
Asakawa said there are four conditions for all Asia-Pacific economies to achieve sustainable growth once the threat of Covid-19 has subsided.
He said countries need to return to globalisation by fighting protectionism, strengthening regional trade and attracting global investment.
He called for the region’s widening income gap to be closed by strengthening social protection, pointing out that 80 million people have slid back into absolute poverty during the pandemic.
Asakawa said countries need to “harvest digitalisation”, taking advantage of the move towards working from home, e-banking and home-schooling by narrowing the digital divide through universal access to broadband and improving cybersecurity.
Finally, he said countries must strengthen domestic resource mobilisation because their currencies may drop when the US normalises interest rates, which is likely to push the dollar higher.
The ADB says developing Asia’s combined economies will grow 7.1 percent this year from last year’s 0.1 percent contraction but growth will moderate to 5.5 percent next year with continued weakness in some Southeast-Asian economies such as Thailand.
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