Cambodia's New Growth Strategy   9

A New Growth Strategy for Cambodia: Economic Scenarios (Background Paper 09)

Author(s): Roland Rajah

Published: 01-Apr-2025
English PDF (33)

Abstract/Summary

Cambodia was one of the fastest growing economies in the world prior to the pandemic. Given this strong performance, The Royal Government of Cambodia’s Vision 2050 aims for the country to reach high-income country status by mid-century. The COVID-19 pandemic, Russia’s invasion of Ukraine, and a troubled domestic real estate sector have made it challenging for Cambodia to sustain historic growth rates. Further challenges on the horizon include slower global economic growth, geoeconomic fragmentation, rising automation, and increasing climate impacts. To reach high-income country status under these adverse conditions, Cambodia needs to overhaul its growth trajectory. In this paper, we model three alternative scenarios. In a business-as-usual scenario, Cambodia would find itself stuck in the middle-income trap. By contrast, an accelerated reform scenario would target high potential sectors such as electronics manufacturing and agro-processing which is projected to deliver annual economic growth averaging 6.4 percent for the rest of this decade. In the long run however, more comprehensive reforms to improve governance and support human development are required. In a comprehensive reform scenario, Cambodia can sustain economic growth rates of 5-6 percent per year over the decades ahead, reaching high-income country status by around 2060 or broadly mid-century.




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