PHNOM PENH, Sept. 20 (Xinhua) -- The Asian Development Bank (ADB) lowered its 2023 economic growth forecast for Cambodia to 5.3 percent from an earlier prediction of 5.5 percent, mainly due to slower-than-expected industry growth, according to its updated economic report released on Wednesday.
Exports of garments, footwear, and travel items declined by 18.6 percent year-on-year in the first half of 2023, the report said, adding that this was partly offset by a 22.9 percent increase in exports of manufactures other than garments, such as automotive parts, solar panels, and furniture.
"Better growth prospects in major advanced economies should boost Cambodian exports for the remainder of 2023 even as domestic industrial growth slowed earlier in the year," ADB country director for Cambodia Jyotsana Varma said in a press statement.
"Services are the main contributor to growth as the sector exceeded expectations in the first half of the year, primarily fueled by robust tourism recovery," she added.
The report raised the service growth projection in 2023 from 7.3 percent to 8 percent, the forecast for industry output growth was revised from 5.8 percent to 4.8 percent, and the forecast for agriculture growth from 1.1 percent to 0.9 percent.
The report maintained the inflation forecast for this year at 3 percent and next year at 4 percent, saying that improved merchandise trade and tourism recovery should continue to reduce the current account deficit.
Risks to the outlook include sluggish growth in advanced economies, lower tourist arrivals and foreign direct investment inflows, prolonged tightening of global financial conditions, rising energy prices, concerns over high private debt and domestic financial stability, and extreme weather exacerbated by climate change, the report said.
According to the report, the ADB maintained the country's 2024 growth forecast at 6 percent.