Publication: Cambodia Economic Update, May 2023: Post-COVID-19 Economic Recovery
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2023-06-27
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2023-06-27
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Cambodia’s economic recovery solidified in 2022 with real growth accelerating to 5.2 percent. After shifting to “living with COVID-19” in late 2021, the economy is firmly on a path to recovery and has now returned to its pre-pandemic growth trajectory. Initially led by the strong performance of export-oriented manufacturing, growth drivers are rotating to the services and agriculture sectors. Meanwhile, the agriculture sector is benefitting from improved access to regional markets, thanks to newly ratified bi-lateral and regional free trade agreements. Weakening external demand is, however, starting to weigh on the country’s economic recovery. Despite weakening goods export performance, the current account balance is improving, thanks to the rebound in the travel and tourism industry and remittances, while the oil price shock eased. The economic recovery and good revenue administration underpinned an across-the board improvement in domestic revenue collection. The authorities continued to provide cash transfers for poor and vulnerable households, although the worst of the pandemic is now behind us. In this regard, the Cambodian authorities have extended the COVID-19 cash transfer program, with an additional budget. To enhance the long-term resilience and competitiveness of the economy, efforts are needed to further promote export product diversification.
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“World Bank. 2023. Cambodia Economic Update, May 2023: Post-COVID-19 Economic Recovery. © World Bank. http://hdl.handle.net/10986/39931 License: CC BY-NC 3.0 IGO.”
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The PEU is intended for a broad set of audience, including regional forums, policy makers, business leaders, international donors and the community of analysts and professionals engaged in the economies of Pacific Island countries. In dealing with the challenges of rising inflation, tepid recovery from the pandemic and global slowdown, the PICs should strike a balance between supporting livelihoods and reducing future public debt risks. The need for fiscal support during the current environment of high inflation and tepid economic recovery is understandable as it provides the much needed relief for vulnerable households and businesses to navigate the crisis. Nonetheless, these support measures create significant fiscal burdens, and are unsustainable, particularly if the high energy and food prices persist longer than envisaged. Most PICs already face low capacity to finance unexpected shocks which would be further tested by a natural disaster event. Therefore, PICs should tread a delicate balance between fiscal support measures and achieving fiscal sustainability. Any forthcoming fiscal support should be well-targeted, time-bound, and deficit-neutral. Over the medium-term, fiscal efficiency gains and ongoing donor support is critical to finance key development challenges and climate adaptation. Revenue-based fiscal consolidation measures could include improving the efficiency of tax collections and eliminating tax exemptions. On the expenditure side, PICs have limited room to sharply cut spending given the expected modest growth and ongoing development needs. Therefore, it becomes imperative to improve the efficiency of public spending, to maximize social dividends for every dollar spent. Resulting savings from fiscal consolidation measures could help build sovereign wealth funds to provide added fiscal buffers during shocks and economic downturns. Due to high vulnerability to disasters and climate change, PICs will need to seek ongoing concessional financing for critical climate adaptation and development needs.Publication Central African Republic Economic Update, July 2021(World Bank, Washington, DC, 2021-07)The economy of the Central African Republic (CAR) decelerated in 2020 compared to 2019. Despite a relatively contained health impact, the coronavirus disease 2019 (COVID-19) pandemic has had a significant impact on the country’s economy, with the disruption in global value chains, low external demand, and domestic containment measures that significantly affected trade, transport, and tourism. Nevertheless, CAR’s GDP growth of 0.8 percent has outpaced the average of regional peers (−2.9 percent) and countries affected by fragility, conflict and violence (FCV) (−1.7 percent). 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