Financial Sector in Cambodia Rebounds in The Second Quarter of 2020 After Consecutive Downfall
On 31 August, Kea Boran, chairman of the board of directors of the Cambodia Microfinance Association, stated that “despite the shrink in the first quarter, there is a significant increase in the financial sector in the second quarter this year.”
Even though there were impacts of the novel coronavirus, in the first quarter of 2020, Cambodia’s economic growth rate was normal and Cambodia normalized the economic activities until the end of March 2020.
He added that the impacts severely affected the economic security in April and May and the nationwide growth deteriorated due to the spread of COVID-19 as there was a sharp increase in the infection rate until the royal government was forced to lock down all educational institutions, restaurants, and entertainment venues.
The approach to contain the spread of the virus has affected critical sectors, including the financial sector.
During April and May, finance and banking sectors were hit the hardest, especially in April, the credits lessened dramatically until May.
In June and July, credit growth rebounded to a normal rate. If compared to July 2019, the growth rate slowed down, but it can be considered as a rapid increase after 2 months of COVID-19 crisis.
He emphasized that the increase of credit growth derived from the fact that Cambodia was able to contain the further spread of COVID-19. Even there were some daily confirmed cases, those were imported. In addition, Cambodia does not carry out a strict lockdown as it would complicate the economic situation.
The royal government gave the green light to the reopening of several sectors, including hotels, restaurants, and entertainment venues despite the need for strict hygiene practice.
According to his analysis during the 7-month period, the reopening of proper Cambodia’s economic activities, allowing finance and banking sectors to rebound quickly.
He reinstated that the finance and banking sector indicates a rapid growth in the second quarter due to the increase in saving, and even if the credit dropped, it illustrates that the public still has confidence in this sector.