Cambodian Economic Association tells lawmakers the crisis will worsen through the end of 2009 before recovery sets in
THE president of the Cambodian Economic Association, a group that promotes economic research, said the Kingdom's economy will continue to decline up until the end of the year.
In a presentation on the global economic crisis to 100 parliament members and senators, the CEA's Chan Sophal said the first five months of the year had been difficult on the economy.
And he warned that the damage inflicted on both the garment sector and tourism meant the situation was likely to worsen.
"I believe the decline in Cambodia's economy will get more and more serious by the end of the year, because garment exports declined by up to 27 percent in the first five months as against a predicted 5 percent drop," he said.
"At the same time, tourism declined 2.23 percent after it was expected to remain unchanged."
Chan Sophal said rural residents would face food shortages between July and October, because they would have no income from jobs and would be afflicted by seasonal drought.
Earlier this year the International Monetary Fund predicted that Cambodia's economy would grow 0.5 percent, while the Economist Intelligence Unit last month projected GDP growth of minus 3 percent.
Cambodia's economy is very vulnerable to the world economic crisis.
The government said that it expects growth of 2 percent, while the World Bank said the economy would shrink by 1 percent in its latest forecast.
Prime Minister Hun Sen has previously said that the economy could achieve 6 percent GDP growth this year.
Douglas Broderick, the UN Development Program's representative, said the impact of the global economic crisis would further afflict Cambodia before the situation improved.
He advised the government to focus its efforts on developing human resources and increasing competition.
"I think the basis of Cambodia's economy is very vulnerable to the world economic crisis because the markets in the US and European countries have cut imports of textiles and garments produced in Cambodia," Broderick said.
He added that numerous garment factories had closed and tourist numbers continued to decline.
Even the construction sector, he said, was feeling the negative effects.
Broderick said the government ought to invest more in education, particularly training farmers to improve farming methods.
CPP plays down impact
Cheam Yeap, a ruling party MP and head of the National Assembly's finance, banking and audit committee, acknowledged the slowdown in the economy, but said the country would not be seriously affected.
He said the economy was still small, and that agriculture had excellent potential to safeguard against the crisis.
And he said that even though the Kingdom has suffered from the crisis, it has many opportunities to recover, including agriculture, oil and gas.
"Cambodia will put efforts to find strategies and solutions to save its economy from the world economic crisis and alleviate poverty to meet the [Millennium Development Goals] in 2015," he said.