Cambodia’s economy is projected to continue its gradual recovery by growing 5.0 per cent in 2022 and 5.4 per cent in 2023. The economy is seen to remain resilient despite the challenging outlook for the manufacturing sector due to the expected slowdown in the US and European Union (EU) in the second half of 2022. For 2022, exports grew rapidly by 37.7 per cent in the first half, driven by garment exports.
Garment exports slowed to 18.3 per cent in July and abruptly dropped to 1.5 per cent in August and is expected to remain sluggish for the rest of the year as the global economy slows down. Meanwhile, imports also increased across all major items led by petroleum, textiles, and others, according to the Annual Consultation Report on Cambodia by the ASEAN+3 Macroeconomic Research Office (AMRO).
A sharper-than-expected economic downturn in China could result in a moderation in FDI inflows to Cambodia. Area lockdowns and tight border controls in China, as part of its efforts to manage the pandemic, may also cause supply chain disruptions. This could pose a challenge to Cambodia given that it relies heavily on China for intermediate goods, with more than 60 per cent of textile inputs sourced from China.