Pandemic Checks Cambodia’s Progress on Poverty

Cambodia’s national poverty rate fell by almost half between 2009 and 2019, but the COVID-19 pandemic has more recently reversed poverty reduction progress, a World Bank report released shows.

Cambodia’s poverty rate dropped from 33.8 percent to 17.8 percent over the ten-year period to 2019/2020, with almost 2 million Cambodians escaping poverty, the World Bank’s Poverty Assessment Report for Cambodia, Toward A More Inclusive and Resilient Cambodia, says. Since 2020, the rate has increased by 2.8 percentage points, indicating that around 460,000 people have fallen below poverty income thresholds.

Between 2009 and 2019, Cambodia experienced a decade of growth and widespread income gains. Rapid economic expansion, combined with structural change, led to rising wages and higher standards of living.

Rising non-farm earnings, for example in the tourism, garment and construction sectors, contributed most to poverty reduction, the report finds. Trade and investment-led growth supported structural transformation toward more productive sectors, creating better-paying manufacturing and services jobs. Workers were able to move out of low-paying agriculture into better-paying sectors of the economy and boost their earnings.

At the same time, living conditions and access to basic services such as electricity, water supply, sanitation, health, and education improved for broad segments of the population. This improvement has narrowed standard-of-living gaps between rural and urban households.

“Efforts to accelerate Cambodia’s structural transformation have helped reduce poverty,” said Maryam Salim, World Bank Country Manager for Cambodia. “However, despite this impressive success, many households remained vulnerable, with few savings or safety nets. This meant COVID-19 dealt a setback the country’s progress in combatting poverty as employment and wages diminished.”

To support a more inclusive and resilient recovery from the pandemic and the economic shocks that came with it, Cambodia could consider a range of policy actions, the report suggests. These include targeted cash transfers, steps to strengthening social protection, investments in health and education.

Source – The World Bank