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Cambodia’s Economy Sees Significant Growth in 2022

PHNOM PENH, Cambodia - The Kingdom of Cambodia’s economy has experienced a remarkable growth rate in 2022, with key sectors showing significant increases.

Export Sector Booms

According to data released by the National Bank of Cambodia (NBC), the country’s export sector saw a notable surge, with the rate of manufacture of products for export rising by 4.3%. This increase was largely driven by non-garment products such as:

  • Electronics: up 1.3 times
  • Vehicles and vehicle accessories: up 3.2 times

Domestic Market Sees Slowdown

In contrast, the domestic market saw a decline in production, with the rate of manufacture of products for the local market decreasing by 7%. However, the agricultural sector managed to edge up by 1.1%, supported by growth in the rice, rubber, and fisheries sub-sectors.

Construction and Real Estate Sectors Experience Slow Growth

The construction and real estate sectors also experienced slower rates of growth, increasing by:

  • 1.1%
  • 0.5%

respectively.

Balance of Payments Records Surplus

Meanwhile, the balance of payments is estimated to record a surplus of USD 226.1 million, supported by a net inflow of financial account. This surplus has increased the country’s international reserves to USD 20 billion, equivalent to seven months’ worth of prospective imports of goods and services - higher than the minimum benchmark for developing countries.

Inflation Decreases

Inflation also decreased significantly, dropping from 5.4% in 2022 to 2.1%, mainly due to a decrease in oil-related goods and services prices and lower food inflation rates.

Exchange Rate Stabilizes

The exchange rate continued to stabilize, averaging 4,110 Riel per US dollar - a 0.2% decrease from the previous year’s average of 4,102 Riel.

Banking System Remains Resilient

The banking system in Cambodia has continued to show resilience and progress, with total assets increasing by 8.6% to KHR 346.7 trillion (USD 84.3 billion). The banking sector accounted for:

  • 91.8%
  • Microfinance sector: 7.6%
  • Financial leasing sector: 0.6%

Total credit to other sectors rose by 4.8%, while customer deposits increased by 13.1%. The capital position of the banking system remains strong, with a capital adequacy ratio registered at an elevated level of:

  • 22.7% for the banking sector
  • 25.4% for the microfinance sector

Payment Systems Modernized

Cambodia’s payment systems have been constantly developed and modernized to make payments more efficient, secure, and affordable. The Cambodian Shared Switch (CSS) has officially been launched, facilitating cross-institutional transactions using debit cards at all ATMs and POS machines of member institutions.

Digital payment services have contributed significantly to promoting financial inclusion, with the number of e-wallet accounts recorded at 19.7 million and the value of payment services increasing by 18% - equivalent to 2.4 times the country’s GDP.

Monetary Policy and Financial Inclusion

The NBC has implemented various measures to promote financial inclusion, including:

  • Outreach programs promoting the use of Riel
  • Financial literacy initiatives
  • The Bakong system

Strengthening governance and human resource development are essential for the growth of the NBC. Internal audits and inspections have been performed to improve compliance with regulations, guidelines, and procedures, contributing to good governance and risk management.

The capacity of capital/provincial branches has also been improved through training and development programs.

Conclusion

Overall, Cambodia’s economy has shown significant resilience and growth in 2022, driven by various sectors and supported by sound monetary policy and financial inclusion initiatives.