THE government on Monday said Cambodia's economic growth for 2009 would slow to 6.5 percent after years of double-digit expansion.
The global economic crisis has hit exports and investment, already lowering growth over the first nine months of this year to an average of seven percent, and the downwards trend will continue on into the new year, Finance Minister Keat Chhon said.
According to Keat Chhon, the slowdown follows a drop in garment purchase orders from the United States, the principal market for Cambodia's textile sector.
"The purchasing power of US and EU consumers has declined due to turmoil in the financial markets, and this has caused international trade to slow," he told the Post Monday.
He added that he expects garment production to remain stable, but with manufacturers accepting lower profit margins.
Cambodia has seen economic growth double since 2004, primarily due to robust garment exports, rising tourism and agricultural diversification, according to figures from the Cambodia Institute of Development Study.
"The first issue is that we have serious structural issues on the economy because we aren't diversified enough.... the second issue is the financial crisis that has dampened demand in the export market and dried up sources of capital," said Kang Chandararot, head of the economics unit at the Cambodia Institute of Development Studies.
But according to Heang Rithy, president of the Cambodian National Research Organisation, the primary cause of the slowdown in economic growth is not the global financial crisis but mismanagement of the economy.
"The government has not offered the guarantees for foreign investors which would allow them to keep their investments in Cambodia.... We are not making any progress economically," he told the Post Monday.