CLMV countries will gain a stronger growth momentum in 2023, but remain below its growth potential prior to the COVID-19 outbreaks. The rebound would be uneven across countries, depending on economic fundamentals and country-specific risks.
SCB EIC expects that Cambodia economy will grow 5.5% this year, 3.0% in Laos and Myanmar, and 6.2% in Vietnam.
Domestic demand and tourism will be key drivers for CLMV economic recovery in 2023
Domestic demand will gain support from improvements in the labor market, as seen in Vietnam’s Q4/22 employment soaring to its highest level since the COVID-19 outbreaks. Meanwhile, the service sector will benefit from rising tourist arrivals this year—particularly Chinese visitors, who made up about 30-35% of total foreign tourists in 2019.
China has authorized outbound group tours traveling to Cambodia and Laos starting from February 6, 2023, and is expected to add more destinations to the list soon. In particular, Cambodia and Vietnam are poised to benefit the most from tourism rebound, considering the high contribution of tourism (both domestic and foreign) to GDP at 18.2% and 9.8%, respectively.
External demand will decline alongside a subdued global economy
Such gloomy backdrop could affect CLMV exports and foreign direct investment (FDI). Among CLMV countries, Vietnam would take the hardest hit due to its extensive ties to the global supply chain.
SCB EIC thus expects only Vietnam to witness a gradual slowdown this year, after a profound growth of 8% in 2022. China’s reopening might somewhat cushion adverse impacts on exports and FDI. Still, there remain risks that weak external demand could depress CLMV domestic demand, manufacturing production, and employment.
Read the complete article : CLMV Outlook / SCB EIC expects stronger CLMV economic growth in 2023, despite a global economic slowdown, yet remains below its pre-pandemic potential | SCBEIC
About the author
EIC or Economic Intelligence Center, a unit of Siam Commercial Bank Public Company Limited, is established to provide business executives with valuable insights for effective decision making.
