Fund predicts economy will grow 4.8 pc as FDI, tourism recover
THE International Monetary Fund (IMF) raised its forecast for GDP growth in Cambodia this year to 4.8 percent, following signs of recovery in foreign direct investment and tourism.
Abdul Abiad, senior economist at IMF’s research department, told the Post at the sidelines of a press briefing at the World Economic Outlook conference in Washington on Wednesday that the IMF predicts a GDP rise of 4.8 percent in 2010, with a 6.8 percent rise forecast for 2011.
In September, the international body predicted 4.25 percent GDP growth in the Kingdom this year.
Abdul Abiad said that signs of positive growth had been strong in Cambodia during the first quarter, as foreign direct investment began to recover and the tourism sector showed signs of a rebound.
“These are the main reasons we expect the next acceleration in the growth,” he said.
“The sectors pushing growth in Cambodia will be still garment exports, tourism, and agriculture. Cambodia will be like other Asian countries – it will benefit from the global recovery,” he added.
Abdul Abiad said IMF expects Cambodia’s inflation rate to be about 5.2 percent in 2010, and 7.7 percent in 2011.
The new IMF estimate is one of the most positive predictions made for GDP growth in Kingdom so far. It also echoes other major financial organisations, which have reconsidered initial estimates as Cambodia exits the worst of the global economic crisis.
Earlier this month, the World Bank redrew its forecast for GDP growth to 4.4 percent for 2010, up from a 4.2 percent prediction in November. It expects a 6 percent increase in GDP for next year.
The World Bank estimates Cambodia’s foreign direct investment will grow to US$725 million in 2010, up from $515 million in 2009. This would mean a revival nearly matching 2008’s FDI levels, when investments came in at $795 million.
On Tuesday, the Asian Development Bank projected growth of 4.5 percent and 6 percent for 2010 and 2011 respectively. But its analysts warned that Cambodia must become more competitive to make the most of a strong Asian economic resurgence.
All estimates are, so far, behind government predictions. Government officials, speaking in March, hoped for 5 percent growth in 2010, driven by development in Cambodia’s agricultural sector.
The IMF prediction follows a week in which the business community has welcomed early indicators that the Cambodia may be stepping out of the crisis.
On Monday, the Council for the Development of Cambodia stated that government-approved investment rose by 53 percent in March to $691 million, from $452 million in the same period of 2009. FDI declined 35.2 percent to $514.7 million in 2009, from $794.7 million in 2008, according to a central bank annual report.
Minister of Tourism Thong Khon said Wednesday that from January to March, the number of visitor arrivals increased by 9 percent on Q1 2009.