Cambodia’s economic growth is forecast to remain stable at just short of 7 percent in 2018, the World Bank has said.
Inguna Dobraja, its country representative, said Cambodia had begun to “climb up the manufacturing value chain” from garments to electronics and auto parts.
But the Bank added that the country must undertake deeper structural reforms to address high production costs.
At the economic outlook report launch on Wednesday, Dobraja said: “To sustain these positive trends Cambodia must embark on deeper structural reforms in improving the business environment, further diversifying exports, lowering the cost of logistics by bridging the skills gap.”
The Bank recorded growth at 7 percent in 2016 and projects Cambodia’s 2017 growth will dip slightly to 6.8 percent.
It says textile exports have moderated which has been partly offset by the gradual emergence of exports of electrical machinery, vehicle parts and equipment, and the ongoing construction boom. Tourism figures had also improved, it said.
However, the Bank warned of risks from political instability that may arise during the election period next year. “Downside risks to this outlook are a slowdown in the Chinese economy and potential election-related uncertainty,” it said.
The World Bank report comes as western nations consider sanctions against Cambodia for the dissolution of the main opposition party and a wider crackdown on dissent and opposition to the rule of Prime Minister Hun Sen.
Sweden and the United States have already announced measures against Cambodia following a court decision last week that banned the Cambodia National Rescue Party.
Miguel Sanchez, a senior World Bank economist, said the political uncertainties would have a negative impact on growth and investment. “This affects the economy, and this is something we’re monitoring closely,” he said.