Cambodia’s efforts to promote a resilient recovery from recent economic shocks were today bolstered by a $274 million credit from the World Bank for the Cambodia Growth and Resilience Development Policy Operation. The financing approved by the World Bank’s Board of Executive Directors will support reforms that will boost growth and strengthen Cambodia’s resilience.
Cambodia’s economy was badly affected by the COVID-19 pandemic, with GDP contracting by 3.1 percent in 2020, the country’s first recession in 30 years. Simulations show that the poverty rate increased by 2.8 percentage points, pushing about 460,000 individuals into poverty. The government responded quickly and effectively to the pandemic, assisting business and vulnerable families, but the associated rise in spending has meant that fiscal consolidation will be required in the period ahead.
While the economy has recovered in 2021 and 2022, the weakening external environment means that returning to the strong rates of growth seen prior to the pandemic will prove challenging. The ongoing war in Ukraine, economic slowdown in the United States — Cambodia’s largest export market — and slower growth in China will all affect Cambodia’s trade prospects. The country is also highly vulnerable to the impacts of climate change, with high exposure to floods and drought.