The UN Development Programme (UNDP) on November 23 announced that it revised down its 2022 estimate for the Kingdom’s gross domestic product (GDP) to 4.9 per cent, from the 5.4 per cent predicted before Russia had begun the ongoing military offensive in Ukraine on February 24.
The UNDP assured in a statement that the forecast factors in “the positive effect that social protection and other mitigation measures have on the economy”.
This comes as a policy brief on the “2022 Economic and Social Impact Assessment of Covid-19 and War in Ukraine on Cambodia” was launched by the UNDP, the finance and social affairs ministries, and the UN’s Joint SDG Fund, according to the statement.
“The assessment uses a computable general equilibrium [CGE] model with real economic data to simulate shocks and examine the reaction of the economy considering the impact of rising fuel, food and fertiliser prices, in addition to the global economic slowdown and its impact on demand for Cambodian exports, the tourism sector and construction sector investments.
“Increases in the poverty rate were also found to be mitigated by the implementation of social protection measures. The poverty rate is estimated at 15.2 per cent, which is slightly higher than the pre-war estimation of 15.0 per cent, but 0.5 percentage points lower than the projection with no social interventions.
“This translates to the prevention of around 85,000 people from falling back into poverty. Due to the contraction of the economy, the model estimates 1.25 per cent of unemployment in 2022 as compared to 1.12 per cent in the pre-war estimation. The unemployment rate may increase to 1.45 per cent without social protection measures,” it said.
UNDP Cambodia resident representative Alissar Chaker said in the statement that Cambodia’s post-Covid recovery has been decelerated “by uncertainties driven largely by external shocks”.
She recommended a “focus on building the socio-economic resilience of the country and enhancing its preparedness for absorbing future shocks.
“This includes doubling down on investments in human development, optimising and expanding social protection, fostering a just energy transition and green economy, managing energy security, and accelerating an inclusive and whole-of-society digital transformation,” Chaker added.
Also speaking in the statement, finance ministry undersecretary of state Tep Phiyorin underscored the significance of recalibrating the CGE model employed for such analyses of the Kingdom.
The revamped models offer “important policy input to support the Royal Government of Cambodia in formulating responses to overcome the impacts of the pandemic and additional shocks that the country is now facing”, he said.
“The Royal Government of Cambodia has prioritised the people’s wellbeing as the first priority in the 2023’s budget,” Phiyorin added.
And social affairs ministry secretary of state Samheng Boros was quoted as saying: “The modelling revalidates the importance of developing the social protection system in Cambodia.
“It clearly shows that social protection measures have a central role to play in protecting the Cambodian economy and its people from unforeseen challenges like the Covid-19 pandemic and war in Ukraine,” he added.
On a similar note, the World Bank (WB) in September raised its 2022 growth forecast for Cambodia’s real GDP to 4.8 per cent, from 4.5 per cent in April, as a rise in the export of garment, footwear and travel goods (GTF), bicycle and agricultural items continued to underpin post-Covid-19 economic recovery.