Cambodia’s economic growth predicted at 7 percent: ADB

APD NEWS

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By APD writer Kin Ratha

Phnom Penh, April 12 (APD) - Backed by the robust expansion in exports, strong foreign direct investment inflows, the rise of tourist arrivals, and buoyant domestic demand, Cambodia’s economic growth prediction for 2018 remains positive.

In the Asia Development Outlook 2018 released yesterday, the Asia Development Bank (ADB) forecasts Cambodia’s economic growth at 7 percent in 2018 and next year, backed by strong growth in main economic driving sectors –construction, garment and footwear, tourism and domestic trade.

Industry is likely to continue to grow by around 9.6 percent, with a slowdown in garment and footwear offset by stronger growth in emerging industries –electronical parts, automobile components, bicycles, milled rice, and rubber.

Growth in service sector should remain at 7.1 percent as last year, with continued buoyancy in tourism, according to report, adding that the country’s agricultural sector should see 1.8 percent growth year on year.

Fiscal policy is expected to be more expansionary in 2018 than last year, with continuing revenue growth more than offset by higher spending and fiscal deficit target rising to 5.1 percent of gross domestic product (GDP). The current account deficit is seen widening this year as costs for oil and other imported products rise in a fast-growing economy.

“Cambodia’s strong economic growth in the near term is supported by robust export, as well as higher foreign direct investment inflows, tourism activities, and domestic demand. However, rising wages difficulty in doing business, and intensifying competition can undermine the country’s competitiveness,” said Jan Hansan, ADB’s senior Country Economist.

However, the report stated that the national election in July 2018 is a domestic risk while external risks to the outlook could be interest rate tightening in the US faster than anticipated, heightened volatility in international financial markets, or an unexpected hike in oil prices.

(ASIA PACIFIC DAILY)