The National Bank of Cambodia (NBC) raised its economic growth forecast for this year up to seven percent, according to the bank’s mid-year report.
The report, released on Saturday, said the strength of the economy has been fortified by an 11.6 percent growth in exports, a 11.5 percent growth in construction, and a 12.5 percent growth in tourism during the first half of this year.
NBC governor Chea Chanto said: “Cambodia’s economy keeps growing with credibility, especially in the export and tourism sectors, with strong growth in the construction sector and the continued recovery of the agricultural sector, which has helped the economic growth this year to maintain a robust track.”
In its annual report last year, the NBC forecast that the economy would only grow by 6.9 percent this year.
Its mid-year report said foreign exchange reserves rose to $9.1 billion, which could ensure the import of goods and services for six months. The document noted this was high for a developing nation, and predicted that reserves would hit $10 billion by the end of the year.
The NBC said inflation had slowed to 2.6 percent. It predicted that it would reach three percent by the end of this year.
However, it pointed out that the Kingdom’s economy could face some risks from the global financial situation. Specifically, it noted that US interest rates could impact Cambodia’s borrowing costs.
Additionally, the report noted that the increase in minimum wage for garment sector workers and growing protectionism abroad could hit local export industries.
Supreme National Economic Council senior adviser Mey Kalyan said on Sunday that, in general, the economy is still vibrant even though the Kingdom is preparing for the July 29 national elections.
While welcoming this year’s achievements, Kalyan said experts and policymakers should focus on ways to maintain growth over a longer period. He said as Cambodia’s economic base swells, the growth rate could stagnate.
He said that implementing the right policies to maintain the growth rate at seven percent should be a priority.
“The outlook for economic growth in two or three years is not worrying . . . but if we want to become a middle-income or high-middle income nation, it is a challenge and this [long-term growth] is what experts and policymakers should focus on,” Kalyan said.