Cambodia’s economy is projected to continue its gradual recovery by growing 5.0 percent in 2022 and 5.4 percent in 2023. The economy is seen to remain resilient, supported by the resumption of tourism and normalization of domestic activity, despite the challenging outlook for the manufacturing sector due to the expected slowdown in the US and EU in the second half of 2022.
Soaring global energy prices in the first half of 2022, reflecting to a large extent the effects of the war in Ukraine, have resulted in the spike in inflation in Cambodia, peaking at 7.8 percent in June. Inflation fell to 4.9 percent in August as the fall in oil prices due to a gloomy global outlook helped ease overall price pressures in Cambodia. With global oil prices expected to continue to decline, inflation is forecast to fall from 5.3 percent in 2022 to 3.0 percent in 2023.
On the external front, the current account deficit widened to an unprecedented 45.7 percent of GDP in 2021 (or 24.1 percent excluding gold) but is expected to narrow to 35.1 percent of GDP in 2022 (or 21.9 percent of GDP excluding gold), reflecting a recovery in exports and tourism. FDI inflows into Cambodia are expected to remain stable. International reserves plateaued at USD19.5 billion as of June 2022 but remained ample at 9.3 months of imports of goods (excluding gold) and services.