Cambodia’s economic growth is projected to accelerate to 6.9 per cent in 2018 compared with 6.8 per cent in 2017.Rising government spending and favorable global conditions, including robust demand in advanced economies, are expected to underpin Cambodia’s high growth trajectory.

Tourist arrivals accelerated to 11.8 per cent in 2017, compared with five per cent in 2016.

While growth in the construction sector is an important driver of growth and a creator of jobs, it is necessary for Cambodia to closely monitor the construction and real estate boom by developing macro-prudential policies to help reduce the scope for speculative activities.

The agriculture sector also rebounded, with the expansion of rice and rubber plantations, and the gradual recovery of agricultural commodity prices.

Risks remain, however, and they include erosion of export competitiveness due to rapidly rising real wages, a build-up of vulnerabilities from a prolonged real estate and construction boom, potential election-related uncertainty, and periodic jolts of protectionism and escalating trade disputes between the world’s largest trading countries.

To maintain strong growth, it is essential that Cambodia invests more in education and skills training while addressing the constraints facing small and medium businesses.

The country can diversify growth and create more jobs by reducing the costs of company formalisation, operation and financing.