The resurgence of international arrivals and reinvigoration of related sectors provided some relief to tourism-dependent economies such as Cambodia, Fiji and Thailand, the United Nations said in its World Economic Situation and Prospects 2023. The UN also pointed out that a return of Chinese visitors can provide a boost to tourism-dependent economies.

Terming the economic performance in East Asia as uneven in 2022, it said: “For many, fading Covid-19 infections and easing restrictions led to a return to “normal”, encompassing the reopening of borders, resumption of international travel and revival of the services sector, including retail and hospitality.”

However, it cautioned that weaker external demand could hamper the growth prospects of the Kingdom this year.

“As global growth decelerates, weaker external demand will adversely affect manufacturing activities and investment in export-dependent economies such as Cambodia, Malaysia and Viet Nam,” the UN pointed out.

“In tandem, possibly weaker-than-expected economic growth in China could reduce demand for commodities and intermediate goods from within and beyond the region,” it said.

However, the Regional Comprehensive Economic Partnership (RCEP) could play a crucial role in uplifting trade among partner countries, including Cambodia.

“Even as multiple factors have disrupted world trade, however, the Regional Comprehensive Economic Partnership, which entered into force on 1 January 2022, has deepened trade ties in East Asia through new shipping routes and investment projects,” the agency noted.

According to an estimate, if implementation stays on track, the partnership will add $245 billion annually to regional income and create 2.8 million jobs by 2030.

It also mentioned that China’s growth prospects have important ramifications for many countries in East Asia due to close trade and financial linkages.

“The expected economic recovery should support growth across the region. For instance, a stabilized Chinese property sector can benefit countries that export construction raw materials to China. A return of Chinese visitors can provide a boost to tourism-dependent economies. China’s growth in 2023 may be weaker than the baseline, however, given high uncertainties,” it pointed out.

It noted that the scenario analysis suggests a 1 percentage point decline in GDP growth in China in 2023 could lower GDP growth by 0.06 to 0.41 percentage points in East Asian economies.

“Cambodia, Hong Kong SAR, Mongolia, Singapore and Viet Nam could be most affected as China is their main export market and an important source of imported inputs,” the agency remarked.

While talking about the impact of the Ukraine war in Asia and Pacific, the UN said: “A few countries in the region are more vulnerable to energy and food price fluctuations. Cambodia, Pakistan, Solomon Islands and Vanuatu are more exposed to higher energy prices as their net fuel imports are sizeable relative to GDP, resulting in larger energy import bills. Moreover, access to electricity remains limited while more than half of domestic electricity generation relies on fossil fuels.”

Warning about the prospects of a recession in many countries, it said: “Amid high inflation, aggressive monetary tightening and heightened uncertainties, the current downturn has slowed the pace of economic recovery from the Covid-19 crisis, threatening several countries — both developed and developing — with the prospects of a recession in 2023.”

“This is not the time for short-term thinking or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could put the SDGs farther out of reach. These unprecedented times demand unprecedented action,” said António Guterres, United Nations Secretary-General.

“This action includes a transformative SDG stimulus package, generated through the collective and concerted efforts of all stakeholders,” Guterres added.