The International Monetary Fund (IMF) has retained a 6.7 per cent forecast for the Kingdom’s growth this year amid what it is now referring to as “three-speed” when it comes to the global economic recovery.
In its World Economic Outlook, released on Tuesday, the IMF says that since 1990 Cambodia has made “remarkable strides” but “still needs to make significant improvements to its infrastructure and business climate to attract private investment and further diversify its economy”.
The textile sector still dominates the economy, followed by tourism and agricultural products, it says.
The Asian Development Bank rec-ently predicted that Cambodia would achieve 7.2 per cent growth this year, increasing to 7.5 per cent in 2014 with the recovery of its main export partners, the US and Europe.
The IMF says overall growth in Southeast Asia’s five biggest developing countries - Indonesia, the Philippines, Thailand, Vietnam and Malaysia - this year is projected at 5.9 per cent this year, down slightly from 6.1 per cent in 2012.
It paints a mixed picture for Asia’s leading economies, trimming its growth forecast for China but predicting Japan’s fiscal stimulus will help end years of stagnation and India’s growth will accelerate.
In the region as a whole, growth is predicted to “pick up modestly” to about 5.75 per cent this year, boosted partly by a recovery in demand from outside the region and firm consumption and private investment within.
But the IMF cautions that possible dangers inside and outside the region could upset this positive scenario.
“The potential impact of external risks on Asia remains considerable,” the report says. “In the event of a sev-ere global slowdown, falling external demand would exert a powerful drag on Asia’s most open economies.”
It cites financial imbalances and rising asset prices as risk factors and warns of potential “disruptions to trade from territorial disputes”, an apparent reference to disputes China has with Japan and some Southeast Asian nations over maritime claims.
For China, Asia’s largest economy, the IMF has lowered its growth forecast for this year to eight per cent, a day after Beijing announced a shock downturn during the first quarter.
The IMF cut its prediction for growth in China, Asia’s largest economy, slightly from the 8.2 per cent it had given in January.
It did not give a reason for the reduction, but said expansion would pick up slightly from last year’s actual 7.8 per cent, citing “continued robust domestic demand in both consumption and investment and renewed external demand”.
The fund also cut its forecast for China’s growth in 2014 from 8.5 per cent to 8.2 per cent.
The IMF is more optimistic about Japan, tipping its economy to grow 1.6 per cent this year and 1.4 per cent in 2014, up from its January forecast of 0.4 per cent and 0.7 per cent.
It also says consumer prices will edge up 0.1 per cent on-year in 2013, but rocket three per cent in 2014, thanks to the Bank of Japan’s fresh monetary easing, which was ann-ounced this month.
“After many years of deflation, and little or no growth, the new government has announced a new policy, based on aggressive quantitative easing, a positive inflation target, fiscal stimulus, and structural reforms,” the IMF says.
“This policy will boost growth in the short term.”
Although it welcomes the BoJ’s new monetary easing framework, it adds: “Easing must be accompanied by ambitious growth and fiscal reforms to ensure a sustainable recovery and reduce fiscal risks.”
The IMF report says that although developing nations are retaining strong growth, the US and Europe are growing at different rates.
It predicts negative growth of -0.3 per cent for the euro area in 2013. Although US growth is still slow at 1.9 per cent, it is stable in contrast to the problems affecting Europe.
Additional reporting by Anne Renzenbrink and Daniel De Carteret