The World Bank on Sunday recognized better-than-expected economic growth in Cambodia last year, and predicted that a more stable global economy will be a boon to Cambodia’s garment sector.
In its latest quarterly East Asia and Pacific Economic Update, the World Bank raised its figure for growth in Cambodia’s economy in 2012, which it had estimated at 7 percent in December.
“Cambodia grew faster than expected, at 7.3 percent, bolstered by the strong performance of agriculture, construction and tourism and a recovery in garments,” the report says.
The country saw another record rice harvest in 2012, a massive increase in construction permit approvals and tourist numbers reaching 3.5 million.
The World Bank is forecasting 7 percent growth for Cambodia in both 2013 and 2014, in line with the prediction of the government, which in February said growth was 7.3 percent in 2012. Last week, the Asian Development Bank (ADB) also revised its 2012 growth estimate for Cambodia up to 7.2 percent from a previous estimate of 6.4 percent in October.
A modest 1.8 percent contraction in Cambodia’s garment exports to the U.S. last year was made up for by growth in exports to the European Union (E.U.). With the help of duty-free access under the Everything But Arms treaty, garment exports to the E.U. grew by 10.8 percent to $1.8 billion in 2012, according to the ADB.
The East Asia and Pacific was the fastest growing region last year, the World Bank said, posting an overall growth rate of 7.5 percent, down from the 8.3 percent growth recorded in 2011 due to a slowing of exports to Western economies. Economies in the region are expected to grow by an average of 7.8 percent in 2013, and 7.6 percent in the subsequent two years, the bank said.
According to the World Bank, the risk that regional economies will be negatively affected by economic woes in the eurozone and the U.S. has declined since the middle of last year. The World Bank predicts that global growth this year will be 2.4 percent, rising to 3 percent next year.
“While still fragile, there are signs of a turnaround in real activity in high income economies, thus external demand for the East Asia and Pacific region’s exports will stabilize this year,” the bank said.
“The prospects for the region’s small economies have markedly improved, although last year’s strong performance will not likely be matched this year,” the World Bank report says. “In Cambodia, a likely stabilization in high-income country conditions should support further improvements on garment production and exports.”