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World Bank issues grim 2009 forecast

THE World Bank issued a bleak assessment for the Cambodian economy on Wednesday, predicting only 4.9 percent growth in 2009, with the sharpest slowdowns in the garment and tourism sectors.

The statement comes in stark contrast to the optimistic forecasts by the government and Prime Minister Hun Sen, which put growth figures at 6.5 percent for 2009.

Stephane Guimbert, the World Bank senior economist for East Asia and Pacific, said that Cambodia's reliance on Korean tourism and US garment sales would expose the country to crisis-hit economies.

"Compared to many other countries in the region, [Cambodia] is even more open to the external environment," she said.

Guimbert said that though the country has benefited from its open policies, the slow global economy will cut demand for Cambodian exports and reduce tourism arrivals and foreign investment.

The bank put 2008 growth at  6.7 percent, adding that remittances, which made up four percent of national income last year, would also fall.

Vikram Nehru, the World Bank's regional chief economist for East Asia and Pacific, said that garment export orders and tourist arrivals had already declined.

He added that banking would also take a hit from the recession.

"This particular crisis hit when [Cambodia's] bank credit was growing very rapidly ... Cambodia was unlucky to be caught in the crisis at this particular time," he said.

Ouk Rabun, secretary of state for the Finance Ministry, told the National Assembly on Monday that 2009 growth would hit 6.5 percent and inflation would drop to 10 percent. 

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