Search

Search form

Logo of Phnom Penh Post newspaper Phnom Penh Post - Kingdom on track for good 2018, says AMRO

Kingdom on track for good 2018, says AMRO

Workers stitch clothes at a garment factory in Sihanoukville’s Special Economic Zone.
Workers stitch clothes at a garment factory in Sihanoukville’s Special Economic Zone. Sahiba Chawdhary

Kingdom on track for good 2018, says AMRO

Cambodia’s economic growth is expected to remain stable this year and the next, but structural reforms and a rebalancing of the budget is critical in the medium term to sustain economic growth, the Asean+3 Macroeconomic Research Office (AMRO) said yesterday in a report.

According to the report, which comes following AMRO’s annual consultation visit that ended in June of this year and collected data up until mid-September, Cambodia’s economy is expected to grow at 6.9 percent in 2017 and 6.8 percent in 2018, buoyed by the tourism and construction sectors despite a slowdown in the garment sector.

Meanwhile, the regional think tank projected that headline inflation may increase further to 3.3 percent in 2017 from 3 percent in 2016, driven largely by increasing global oil prices. Inflation is expected to stabilise at around 3.5 percent in 2018, the report added.

‘Vulnerable to shocks’
While AMRO said that Cambodia’s “overall fiscal position remains strong, with continued high tax revenue collection”, it added that a larger fiscal deficit is planned in 2017 due to higher government spending to support the economy.

However, the report noted that Cambodia’s economic risks stem mainly from the rising cost of labour, the strengthening of the US dollar and a potential loss of preferential treatment in trade and external financing.

“The domestic financial system is vulnerable to shocks from the global financial market with its heavy dependence on external funding,” the report said.

It added that while Cambodia’s wage increase should be in line with underlying productivity growth, the Kingdom could offset the delay

in productivity if it enhanced its trade facilitation, improved logistics and reduced persistently high costs of electricity.

Nevertheless, AMRO urged that the Cambodian government needs to spend more of its budget on properly improving public sector capacity by “rebalancing budget allocation towards more capital investment”, which is essential to enhance growth prospects.

“Authorities should also consider diversifying financing sources to sustain infrastructure spending and boost spending efficiency,” the report said.

RECOMMENDED STORIES

  • Breaking: PM says prominent human rights NGO ‘must close’

    Prime Minister Hun Sen has instructed the Interior Ministry to investigate the Cambodian Center for Human Rights (CCHR) and potentially close it “because they follow foreigners”, appearing to link the rights group to the opposition Cambodia National Rescue Party's purported “revolution”. The CNRP - the

  • Rainsy and Sokha ‘would already be dead’: PM

    Prime Minister Hun Sen on Sunday appeared to suggest he would have assassinated opposition leaders Sam Rainsy and Kem Sokha had he known they were promising to “organise a new government” in the aftermath of the disputed 2013 national elections. In a clip from his speech

  • Massive ceremony at Angkor Wat will show ‘Cambodia not in anarchy’: PM

    Government officials, thousands of monks and Prime Minister Hun Sen himself will hold a massive prayer ceremony at Angkor Wat in early December to highlight the Kingdom’s continuing “peace, independence and political stability”, a spectacle observers said was designed to disguise the deterioration of

  • PM tells workers CNRP is to blame for any sanctions

    In a speech to workers yesterday, Prime Minister Hun Sen pinned the blame for any damage inflicted on Cambodia’s garment industry by potential economic sanctions squarely on the opposition party. “You must remember clearly that if the purchase orders are reduced, it is all