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.

MOST VIEWED

  • Kem Sokha’s daughters slam ‘liar’ Sam Rainsy over ‘smears’

    The daughters of former opposition leader Kem Sokha hit out at Sam Rainsy on Tuesday, accusing the newly nominated “acting president” of the Cambodia National Rescue Party (CNRP) of leading a “smear campaign” against their father and “repeatedly lying to the public”. The Supreme Court-dissolved

  • US Embassy urges reconciliation

    The US has urged Cambodia to restore the independence of the media, drop charges against Kem Sokha and other political prisoners, and end the prohibition of political activity by opposition parties. However, senior government officials see the request, issued by US embassy spokesman Arend C

  • Phnom Penh authorities ban march for Human Rights Day

    Phnom Penh authorities have banned a planned march as local NGOs and workers’ unions gear up to celebrate the 70th anniversary of the signing of the Universal Declaration of Human Rights on Monday, with a youth group leader saying they would march nonetheless. The UN

  • Government deports 235 Chinese scammers

    THE Immigration Department of the Ministry of Interior on Thursday deported 235 Chinese nationals, 35 of whom were female, via the Phnom Penh International Airport for their part in a Voice over Internet Protocol (VoIP) online money extortion scam. The deportees were arrested on November 26 over the