Despite uncertainty over the global economy, which has been stymied by a continued weak recovery in many developed economies, Cambodia will continue on its projected growth rate for the rest of this year and into 2017, buoyed by sustained growth from China and India, the Asian Development Bank (ABD) said yesterday in a reiteration of its previous growth forecast.

Cambodia is anticipated to retain its growth forecast of 7 percent this year and 7.1 percent in 2017 – anchored by continued growth in the garment and footwear sector, ADB said in an update to its flagship annual economic publication, Asian Development Outlook 2016.

“The outlook for Cambodia’s economy, after attaining lower-middle-income status in July, remains robust with exports from the garment and footwear industry rising by 9.4 percent in the first half of this year,” Samiuela Tukuafu, ADB’s country director for Cambodia, said in a press release accompanying the update.

“While growth in credit sector moderated to 28.1 percent year-on-year in June 2016, it still indicates buoyant domestic demand,” he said, adding that better weather this year should provide a “mild” recovery for the Kingdom’s agricultural sector that has struggled with extended drought.

The announcement also noted that the Cambodian government continued to increase spending by 15.6 percent during the first half of this year, providing higher civil society wages on the back of increased tax collection.

Meanwhile, inflation forecasts slightly increased due to an expected rise in global oil prices, averaging a projected 3.4 percent in 2017.

The update noted that minimal changes in Cambodia’s account deficit and an increase of exports compared to imports – a gap that is expected to continue to narrow next year – would maintain “Cambodia’s sound external position”.

The World Bank formally reclassified Cambodia as a lower-middle-income status in July, a move that some economists feared would hamper the inflow of foreign aid and preferential trade preferences that the Kingdom enjoys.