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Cambodia economy to shrink 1%-2.9% as COVID-19 hits demand -World Bank

PHNOM PENH, May 29 (Reuters) - Cambodia’s economy is likely to shrink between 1% and 2.9% this year, its worst performance in a quarter of a century, with the global effects of the coronavirus taking a toll on its key growth drivers, the World Bank said on Friday.

The pandemic will put at risk 1.76 million Cambodian jobs from losses in tourism, manufacturing and construction, which together account for more than 70 percent of growth and almost 40 percent of employment, the bank said in its latest report.

Though the coronavirus has infected only 124 people in Cambodia, with no deaths, reduced demand from global fashion brands has seen textile orders slump, forcing garment factories to suspend work and cut hundreds of thousands of jobs in a sector that generates $7 billion a year. The government has estimated the economy grew 7.1% in 2019, but the bank predicts Cambodia’s 2020 growth would be the weakest in 26 years and its fiscal deficit the biggest in 22 years. Bad debt ratios could increase as a result of a weaker property market and a construction slowdown, it said.

“The collapse of growth drivers has hurt economic growth and put at least 1.76 million jobs at risks,” the bank said.

“Capital inflows are tapering off, which in turn is triggering the easing of real estate market prices, likely ending the construction boom.” (Reporting by Prak Chan Thul; Editing by Martin Petty)

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