THE Asian Development Bank yesterday countered Prime Minister Hun Sen’s prediction that gross domestic product growth will reach 8.7 percent this year, citing a smaller projection of 6.8 percent in its annual Asian Development Outlook update.
The premier quoted the growth figure in a speech given on Monday, though the ADB claimed a number of significant factors were not taken into account.
“The estimate referred to by Hun Sen was published in July, which means it was likely based on first-quarter data, whereas our projection is based on data from around July,” said ADB senior country economist Peter Brimble at a briefing yesterday.
The Kingdom’s economic outlook in April was deemed largely positive, with ADB citing growth of 6.5 percent. However, global factors such as the earthquake and tsunami in Japan in March and the sovereign debt crises in the US and Europe were still to affect the Cambodian economy, he said.
Cambodian Economic Association president Chan Sophal agreed with the ADB’s projection, stating it appeared to be a realistic growth outlook.
“ADB’s estimate of 6.8 percent sounds more reasonable and is a more timely prediction,” he said.
“ADB has evidently taken into account a wider variety of factors and seems to have more information on which to formulate their projection.”
While ADB’s prediction for 2011 is considerably lower, the factors attributed to the growth correspond with those provided by Hun Sen earlier this week.
The revision was driven mainly by a surge in garment exports, particularly to the US, which grew by 23 per cent year-on-year during the first half of this year.
Tourism arrivals had risen by 13 per cent and rice exports had maintained an upward trend as well, the ADB report stated.
“Cambodia will maintain solid economic growth for 2011, given the faster-than-expected recovery of garments, exports and tourism, as well as the positive outlook for the expansion of agricultural products,” Brimble said.
The US and the euro zone, the two largest importers of Cambodian garment products, have respective GDP growth projections of 1.6 and 1.7 per cent, according to the report.
But with the instability of those markets likely to continue, the bank echoed the prime minister’s sentiments on diversifying the Kingdom’s economy. Brimble stressed that Cambodia needed to address some long-standing challenges to achieve sustainable growth.
“Economic diversification has clearly been a challenge for a while. It’s already happening, but it needs to accelerate, particularly within the agriculture and tourism sectors,” he said.
Brimble added that the slowdown in global trade was likely to temper growth momentum into next year, with the report forecasting a return to 6.5 per cent growth during the first half of 2012.
Vietnam’s inflation rate, which stands at 22 per cent, was another potential concern for Cambodia, considering the volume of bilateral trade between the countries, Brimble said.
Because of the fall in global oil prices, Cambodia’s inflation rate was expected to average 5.5 per cent throughout 2011 and 2012, unchanged from the initial projection, the report said.