Launch of the Policy Brief “2021 COVID-19 Economic and Social Impact Assessment in Cambodia”

Check Against Delivery

• H.E. Tep Phiyorin
  
  Under Secretary of State, Ministry of Economy and Finance (MEF)
• Mr. Andreas Zurbrugg
  
  Deputy Ambassador, Australian Embassy in Cambodia
• And I am pleased to see the presence of distinguished speakers from the MEF (Ms. Kruy Narin), private sector (Dr. Ken Loo from GMAC), and civil society (Ms. Solinn Lim from Oxfam), and senior officials from the government, diplomatic corps, development partners and other institutions.

Excellencies, ladies and gentlemen,

I am delighted to join you all today for the launch of the Policy Brief on “2021 COVID-19 Economic and Social Impact Assessment in Cambodia: An Integrated Modelling Approach.” This policy brief contributes to the discourse on analyzing the socio-economic consequences of the pandemic on Cambodia and in the formulation of recovery policies.

The policy brief is one of the outputs from a long-standing collaboration between the UN development system, particularly our Economic Technical Lead UNDP, and the Ministry of Economy and Finance. So I take this opportunity to convey my sincere appreciation to the Ministry of Economy and Finance for the partnership.

I would like to jumpstart the discussions by highlighting key findings from the assessment:

First, a glimmer of hope. The Cambodian economy is likely to revert back to a positive growth path this year. The baseline scenario shows that the economy is expected to achieve 2.3 per cent growth, moving from a contraction of 3.1 per cent last year. The positive growth outlook is supported by global economic recovery and gradual re-opening of the economy, anchored on an impressive vaccination rate.

According to the UN report on ‘World Economic Situation and Prospects,’ globally, the economy is projected to grow by 4.7 per cent this year. Strong growth in the United States and Europe drive this optimism and is significant for Cambodia because these are the two largest export markets.

With the commendable achievement of the Royal Government of Cambodia in quickly and widely vaccinating the population at 98.62% of 10m aged 18 and above, it is well-positioned to take advantage of markets that are re-opening in the US and Europe. Cambodia is also on track for a stronger recovery in 2022.

The simulations also demonstrate that unemployment and poverty are likely to improve this year because of positive GDP growth, expansion of social protection and other stimulus packages in place.

Second, we need to remain cautious, even with good prospects for recovery.  Many challenges lie ahead of us. Economic recovery condition remains fragile,  marked by high uncertainty, a complex and fast-evolving situation with the emergence of new coronavirus variants. The assessment tells us that the economy is expected not to recover as fast as we thought at the beginning of the year. The initial optimism has been dimmed by the surge in the new Delta variant, more transmissible and can cause more severe disease, further disrupting social and economic activity.  

We also remain cautious because the simulations confirm what we already tacitly know: that COVID-19 disproportionately affects women. How? The simulations show a higher unemployment rate for female workers because of their higher participation rates in key sectors hit hardest by the pandemic, such as tourism and garments/footwear.

Third, we are confident that Cambodia is on track for a stronger and more robust recovery in 2022. Why? The simulations demonstrate the beneficial effect of social protection measures on GDP growth, unemployment and poverty. Social protection measures are estimated to help push GDP growth by 0.4 percentage points. In other words, without social protection measures, GDP growth of 2.3 per cent in our baseline scenario would drop to 1.9 per cent. Social protection measures are also expected to cushion the poverty rate by 2.9 per cent.

Our recommendation, therefore, is to sustain if not expand the economic stimulus and social protection packages, rather than pulling out immediately at the early meagre signals of positive growth. Social protection should be considered as an investment in saving lives and livelihoods, especially the most vulnerable, and to stimulate a more inclusive and sustainable recovery. Ultimately, these investments will lead to the aspirations of growth and resilience in the Economic Recovery Plan 2021-2023 (ERP).

In addition, in order to achieve the long-term vision of upper MIC status and the CSDGs by 2030, Cambodia must put in place gender-responsive economic recovery policies, expand investments in human capital development as pre-requisites to a healthy, capable and productive economy and inclusive society. This includes investing in quality education and skills for the 21st century, universal health care access and better nutrition, for both women and men.

I close by raising the question of financing the ambitious agenda of an inclusive, equitable and sustainable recovery. We will need to work hand-in-hand for solutions to increase the government’s fiscal space and mobilize additional development financing. Some ideas include (1) developing secure pathways for debt financing; (2) reforming fiscal policy such as increasing taxes on tobacco, alcohol and gambling; and (3) mobilizing green financing including REDD+ and global climate fund, among others.

The UN will continue to support the Royal Government to build forward better and ensure that no one is left behind in the pandemic recovery.

Thank you!