ABSTRACT

The purpose of this research paper is to observe the most impacted sector among the three major contributors, including agricultural, manufacturing and service sectors on Cambodia economic growth. Additionally, the scenario analysis was employed to indicate the negative impact of the global widespread pandemic of Covid-19 on Cambodia economic growth. Responding to the research question, the VAR model which consists of the four endogenous variables, such as the real GDP growth rate, the growth rate of agricultural, the manufacturing and service sectors was run using the quarterly data from 2001:Q1 until 2019:Q4. The empirical result from the VAR model indicated that the industrial or manufacturing sector is the major contributor to Cambodia economic growth while agriculture and service respectively rank number two and three as the sectors influencing Cambodia economic growth. Furthermore, the scenario analysis indicated that in the case that all of the three sectors decrease by 5 percent quarterly for four quarters, Cambodia economic growth is expected to drop around 3.62 percent quarterly. Therefore, to minimize the impact of Covid-19 on Cambodia economic growth, the Royal Government of Cambodia is recommended to form the policy to support domestic manufacturing, especially the SMEs through increasing the regulation on the imported products that Cambodia can produce. The government should provide tax exemption and support to domestic manufacturers. Moreover, the government should provide financial and technical supports to the domestic manufacturers. Finally, the government should facilitate the improvement of the ability of domestic labor by providing vocational trainings..

 Keywords: GDP, Covid-19, VAR Model, Scenario Analysis.