深度-世界银行-柬埔寨经济更新，2021年6月：复苏之路（英文）-2021.6-60页_6mb

Cambodia Economic Update Summary - June 2021

Core Content

This report provides an overview of Cambodia's economic developments and outlook in June 2021, highlighting the recovery from the economic impacts of the pandemic, the role of government-to-person (G2P) payments in social assistance, and the challenges and policy options for sustainable recovery.

Main Points

Recent Economic Developments

• Economic Recovery: After contracting by 3.1% in 2020, Cambodia's economy has gradually recovered, although the recovery is uneven, partial, and volatile due to repeated lockdowns and outbreaks.
• Impact of Pandemic: The pandemic has had uneven economic impacts across sectors. The agriculture sector remained relatively resilient, while the manufacturing and services sectors faced significant disruptions.
• Export Recovery: Exports have started to recover, especially in non-traditional sectors such as bicycles and electronic parts. Garment exports, which had dominated the export mix, now account for 45.6% of total goods (excluding gold) exports in the first four months of 2021.
• FDI Inflows: FDI inflows started to recover in 2021, reaching US$3.4 billion or 13.6% of GDP, with a focus on non-garment manufacturing and agroprocessing.
• Monetary Policy: The National Bank of Cambodia (NBC) has continued its accommodative monetary policy, supporting domestic credit growth and liquidity. The exchange rate has remained stable.
• Fiscal Policy: The government allocated US$719 million for social relief and recovery in 2021, down from US$823 million in 2020. The fiscal deficit is estimated to be 2.7% of GDP, with increased spending on social benefits and grants.
• Social Assistance: The government has launched a new cash transfer scheme for poor and vulnerable households, with over 710,000 households (19.5% of total) receiving transfers as of January 2021.

Outlook

• Growth Uncertainty: Cambodia's growth outlook remains highly uncertain, depending on the virus's trajectory and vaccine rollout.
• Baseline Scenario: Under the baseline scenario, the economy is projected to grow by 4% in 2021, supported by domestic demand recovery and improved external conditions.
• Downside Scenario: Under the downside scenario, growth is expected to be only 1%, due to prolonged lockdowns, delayed vaccine distribution, and reduced FDI inflows.
• Tourism Dependency: Cambodia's economy is heavily dependent on tourism, which is expected to remain below pre-pandemic levels until 2023, delaying recovery.
• Structural Change: There is a shift in FDI towards non-garment manufacturing and agricultural exports, reflecting a diversification of the economy.

Key Challenges and Risks

• Health System Strain: The resurgence of local outbreaks has increased pressure on the public health system, with rising cases and deaths.
• Construction and Real Estate: The construction sector has been affected by a stalled boom and excess supply, leading to subdued activity and declining real estate prices.
• Global Economic Uncertainty: The uncertain global outlook, including delays in vaccine distribution and the partial withdrawal of trade preferences, poses risks to Cambodia's recovery.
• Financial Stability: High credit growth, particularly in construction and real estate, increases the risk of non-performing loans (NPLs) and financial instability.
• Poverty and Employment: Poverty is estimated to have increased, with potential for a 5.4 to 6.0 percentage point rise. Employment recovery is slow, with many households still below pre-pandemic levels.

Policy Recommendations

• Accelerate Vaccination: Urgent steps are needed to speed up the vaccination program, which is critical for reducing hospitalizations and deaths, and easing pressure on the health system.
• Improve Investment Climate: Further reforms are required to improve the business and investment climate, especially to support structural changes in the economy.
• Strengthen Social Protection: Enhancing G2P payments and improving the social assistance landscape is essential to support vulnerable households.
• Monitor Financial Risks: The central bank must closely monitor financial risks, including liquidity, capital, and credit quality, to ensure stability.
• Boost Public Investment: Increasing pro-poor and growth-enhancing public investment, such as cash-for-work projects, is critical for economic recovery.
• Enhance Infrastructure: Improving both hard and soft infrastructure is necessary to reduce transport and logistics costs and enhance external competitiveness.

Special Focus: Government-to-Person (G2P) Payments

• Social Assistance Programs: The government has implemented social assistance delivery programs, including cash transfers, to support poor and vulnerable households.
• Payment Mechanism: The Social Assistance Delivery Program uses a payment mechanism to ensure timely and efficient distribution of social benefits.
• Digital Payments: There is a growing trend towards digital payments, with increasing use of formal accounts and mobile money services among the population.
• Future Scenarios: Improving G2P delivery is a key policy recommendation, with potential future scenarios suggesting the need for more efficient and scalable payment systems.

Conclusion

Cambodia's economic recovery is ongoing but fragile, with significant challenges posed by the pandemic and its aftermath. The government's response, including fiscal and monetary support, has helped stabilize the economy, but more needs to be done to ensure long-term resilience and growth. Strengthening the social assistance landscape and improving the investment climate are critical for sustainable recovery.