WB: Cambodia’s economic pillars unstable due to COVID-19

Phnom Penh capital city (Source: VOD Archive)

Along with other factors such as the COVID-19 pandemic and a sharp decrease in the number of tourist arrivals, a decline in the property sector’s growth amid difficulties in the financial market and an increasing dependence on China’s investment in the construction and real-estate sector have contributed to slowing down Cambodia’s economic growth.

The WB recommended Cambodia to carry out micro-economic measures carefully, such as restricting construction loans and investment in real estate, and tightening lending interest rates and values of loans, except for those who buy houses for the first time.

Regarding the garment and textile sector, which has been one of the main driving forces of the Cambodian economy for many years, the European Branded Clothing Alliance (EBCA) has submitted a petition to the European Union (EU) to postpone the withdrawal of the Everything but Arms (EBA) trade preference scheme for Cambodia.

On February 12, the European Commission (EC) announced to revoke part of the EBA scheme for Cambodia. The EC’s decision will become effective on August 12 and directly affect such products as clothes, footwear and sugar, which are worth around 1.1 billion EUR (1.2 billion USD), equivalent to 20 percent of Cambodia’s export turnover to the EU.

The Garment Manufacturers’ Association in Cambodia (GMAC) said that about 60 percent of the country’s factories are hit hard by the COVID-19 pandemic as their export contracts are cancelled. The pandemic has also affected 74 percent of labourers (around 750,000 people) working in the industry./.

VNA