Publication: Cambodia Economic Update, April 2014 : Coping with Domestic Pressures and Gaining from a Strengthened Global Economy
Date
2014-04-02
ISSN
Published
2014-04-02
Author(s)
World Bank
Abstract
Cambodia's economy has withstood
domestic pressures and managed to sustain its high growth
driven by its usual engines of growth. The external sector
improved as a result of slower imports due to dampened
domestic demand. The post-election adverse effects slowed
down the demand for imports, while export growth advanced.
Inflation rose to 4.7 percent year-on-year at the end of
2013, up from 2.5 percent at the end of 2012. Inflation is
projected to remain in mid-single-digits over the short
term. Financial deepening continues but the gap between
credit and deposit growth rates has widened, reducing bank
liquidity. Government revenue growth has moderated,
resulting in an increase in the fiscal deficit. The latest
joint World Bank and International Monetary Fund (IMF)
debt-sustainability analysis (DSA) conducted in 2013 shows
that Cambodia's debt-distress rating remains low, with
all debt-burden indicators projected to be below respective
thresholds. The prospects for sustaining high growth appear
favorable, and real growth for 2014 is projected to reach
7.2 percent, given expectations of renewed confidence and
political stability, underpinned by the strengthening of the
economic recovery in developed economies. Appropriately
managing domestic pressures in order to gain from the
improved global economic environment will help maintain
macroeconomic stability. Enhancing regional integration will
also enable Cambodia to benefit more from the growth
dynamics throughout the Association of Southeast Asian
Nations (ASEAN) region. While Cambodia does have some fiscal
space to increase wages, a cautious and careful approach to
pay raise may work best.
Link to Data Set
Citation
“World Bank. 2014. Cambodia Economic Update, April 2014 : Coping with Domestic Pressures and Gaining from a Strengthened Global Economy. © Phnom Penh. http://hdl.handle.net/10986/17784 License: CC BY 3.0 IGO.”