The Asian Development Bank (ADB) upheld its growth forecast for Cambodia, with 5.8 percent predicted for 2024 and 6% for 2025, and inflation revised lower to 0.5% from 2% due to reduced fuel and fertilizer prices in the first half of the year.
Yet, farmers and other citizens continue to face challenges with rising fertilizer costs and high cost of living.
Sem Pan, a representative of the Sre Prang community in Sre Prang Village, Trampong Pring commune, Tam Bei District in Tbong Khmum province, said the price of fertilizer concerned farmers in the area. The high cost did not commensurate with the selling price in the market, posing a challenge for agriculture in the community.
“A bag of fertilizer is 120,000 riel (approximately $30) while potatoes cost only 200 riel per kilo, which isn’t proportionate. They have very different prices,” he told CamboJA News.
He suggested that stakeholders review the price of fertilizer to keep it consistent for farmers. In addition, he urged relevant ministries to ensure support for farmers during the rainy and dry season so that there is sufficient water for the farms.
Nok Bunthorn, president of Cambodian Cashew Association in Kampong Thom province, shared a similar view regarding the ADB report, which he said was in line with the forecast for economic growth. But fertilizer prices in his community are still expensive for farmers.
He said the agricultural market has good cashew production, although processing remains limited in Cambodia and depended mostly on neighboring countries.
“People’s lives are not good yet because they have a lot of bank debts and lack money for farming, which requires plenty of capital. Some farmers need fertilizer. Sometimes they have to take out loans,” Bunthorn said, adding that people need higher yields to repay the bank.
According to ADB’s Asian Development Outlook report on September 25, the inflation forecast in 2024 reflected reduced fuel-related goods and services prices, as well as “low fertilizer costs”. This, ADB said, would provide a “much needed relief for people”, especially the most vulnerable, who faced challenges in recent years on the back of rising food and fuel prices.
Its country director for Cambodia Jyotsana Varma said the rebound in the manufacturing sector — especially garments, footwear, and travel goods (GFT) — is powering the country’s economic growth.
“Agriculture and tourism are steadily gaining ground, while continued inflows of foreign direct investment are fueling the country’s economic momentum. Together, these forces are setting the stage for a promising 2024 and positioning Cambodia for robust growth in 2025 and beyond,” she added.
Accordingly, ADB said agriculture was projected to grow by 1.2% in 2024 and 1.3% in 2025. GFT exports expanded 16.9% year-on-year (YoY) in the first half, up from an 18.6% decline in the same period the previous year.
Growth in exports of non-GFT products slowed to 1.3% YoY from 21.2%, the report showed, adding that imports of construction materials and equipment climbed 23.3% YoY in the first half of 2024, driven by public infrastructure investment.
Meanwhile, Thai Channa, 44, of Pongra Senchey community in Tuol Pungra Village, Chom Chao 1 commune in Por Senchey district, saw the ADB report as a “technical economic report”. In her daily life, she has been dealing with increasing food and gas prices, which are not stable, amid a lack of regular income.
“My expenditure and income are not balanced. My income is low [while] expenses are big because of high market prices. If the economy contracts, daily market prices will still increase,” she said.
She proposed that the government balance the supply of goods in the market. If the government maintains a market equilibrium, it would help the citizens.
Meas Sok Sensan, spokesperson of the Ministry of Economy and Finance, agreed with the ADB’s forecast, which, he said, ”did not differ much” from the government’s report.
“In general, we think of three major sectors – agriculture, services and industry – which will grow, just that the industrial sector has a slightly higher growth rate, which makes our economic growth good,” he told CamboJA News.
Hong Vanak, economic researcher at Royal Academy of Cambodia, said gross domestic product (GDP) growth forecasts by ADB and the government were positive due to sustained exports to the US, EU and other countries. However, he noted a decline in the export of bicycles and electrical components.
He said the drop in fuel prices has benefited people, including farmers, and positively impacted Cambodia’s economic growth.
Regarding the tourism sector, he said, while there was growth compared to 2022 and 2023, it was still low.
“Overall, these [factors] and ADB’s predictions are accurate, some of which I have mentioned, according to calculations, ADB’s evaluation, and their indicators,” Vannak said.
Meanwhile, the ADB report said, foreign investment inflows continued “although they decelerated somewhat to $2 billion by mid-2024 from $2.1 billion” in the same period last year. “This was supported by growth in nonfinancial sectors [but] investment in the financial sector slowed appreciably due to lower banking profits.”
Collective Union of Movement of Workers president Pav Sina believed that the ADB forecast was accurate, as it predicted Cambodia’s economic growth from 2024 to 2025.
He opined that the current situation showed “real growth” in the exports of garments, footwear and other products to international markets.
Additionally, as of early 2024, the factories have been operating well, with orders and new factory openings rising although challenges in labor rights persisted, particularly the right to freedom of union, which limited workers’ ability to exercise their rights.
“Factories are continuing to operate [as] Cambodia experienced a shortage of manpower. Our work is related to orders, so the forecast [by ADB] is right,” Sina said.
In the meantime, ADB listed potential risks to Cambodia’s economic outlook, which include weaker growth in major economies, such as China, Europe, and the US, as well as high private debt, volatile global fuel prices, and severe impact from extreme weather events.
In June, the World Bank published a report on Cambodia’s Export Revival and Trade Shifts in 2024, stating that economic growth was expected to slightly improve to 5.8% in 2024, up from 5.6% in 2023.
The economy might also strengthen to 6.1% in 2025 and 6.4% in 2026, thanks to the revival in GFT exports, as well as a boost in tourism.
