Cambodia still enjoys strong growth in 2018

By APD writer Kin Ratha

Phnom Penh, March 20 (APD) — The International Monetary Fund (IMF) in its latest forecast said that Cambodia’s Economy continue to growth around 7 percent this year which is 0.1 percent higher than government’s projection at 6.9 percent earlier this year. The growth is mainly backed by the higher public spending, firm growth in construction and tourism sector.

According to the latest report by an IMF team which was led by Mr. Jarkko Turunen and visited Phnom Penh from March 12 to 16, 2018, to conduct interim discussions on recent developments and Cambodia’s economic outlook.

Mr. Turunen said in the statement released on 17th March that Cambodia’s economy continues to grow at around 7 percent, supported by higher public spending and robust construction and tourism activity, while inflation decline to 2.0 percent in January 2018. The current account deficit is estimated to remain broadly stable at 8.4 percent of GDP in 2017 and foreign reserves continue to grow, reaching US$8.9 billion in January 2018.

“Cambodia’s economic outlook remains positive, but is subject to downside risks. Macro-financial and external risks. As outlined in the 2017 staff report, remain significant and political uncertainties could dampen consumer and investor sentiment. On the upside, stronger global growth may increase foreign demand for goods exports and tourism,” he was quoted.

“Policies should focus on managing macro-financial risks, safeguarding fiscal sustainability and advancing reforms to support growth, resilience and inclusion,” he added.

According to the report from the IMF, the Bank credit growth has moderated somewhat to 17.2 percent in January 2018, however, the credit growth to real estate and construction related activities continues to grow at a higher pace than credit to other sectors. Recently-introduced credit risk and capital buffer regulations are welcome and needed to build resilience.

It added that the general government deficit is estimated to have widened to 2.6 percent of GDP in 2017, as continued revenue growth was more than offset by higher spending. Government deposits, a key fiscal anchor, increased to 12.6 percent of GDP and public external debt remained relatively low at US$6,671 million (about 30 percent of GDP) at end-2017.

“The 2018 budget includes further increases in public wages and capital spending, highlights education, health and social protection among priority development areas, targeting a higher deficit at about 5 percent of GDP. A medium-term budget framework with a new revenue strategy is needed to safeguard fiscal sustainability as recommended in the 2017 staff report,” quoted Mr.Turunen.

(ASIA PACIFIC DAILY)