Logo of Phnom Penh Post newspaper Phnom Penh Post - Premier predicts high growth

Premier predicts high growth

Premier predicts high growth

110913_7
A man carries rice seedlings through a paddy along National Road 2 in Siem Reap commune, in Kandal province's Kandal Stung district. Photo by: HENG CHIVOAN

Cambodia's economic growth could surpass previous estimates and hit 8.7% this year, Prime Minister Hun Sen said in a speech yesterday.

Earlier government forecasts estimated growth of 6% for 2011, though increasing garment exports and a strong recovery in the tourism sector have stimulated the economy above expectations, according to the prime minister.

“We originally projected the economic growth at 6% for the year. However, two months ago, the National Institute of Statistics predicted growth of 8.7%,” he said at a ceremony for National University of Management students at the Diamond Island Convention and Exhibition Center.

However, the Prime Minster  highlighted the Kingdom’s need to diversify its exports in light of the economic uncertainty facing the European Union and United States.

“The majority of factors affecting Cambodia are external rather than internal, such as the sovereign debt problems the US and some European countries are facing,” he said.

“While maintaining and enhancing [trade with] existing markets, we should also look at alternative markets, like China and other countries in the region, which absorb more agricultural products.”

He added that the Kingdom needs to further diversify its economy in order to maintain growth and avoid declines below 6% in the future.

“Depending on garment and footwear exports and the tourism sector alone is not enough to sustain the country’s economic growth. We have to expand the channels of growth,” he said.

While highlighting the potential for further growth, industry experts warned against Cambodia’s rising inflation. ANZ Royal Bank CEO Stephen Higgins, who earlier in the week told the Post the bank expected 7 percent to 8% growth in 2011, said it was due to a strong recovery in prime sectors.

“With exports in the garment sector up 20 percent in August and increasing capital investment in manufacturing, it’s no surprise that the economy is very strong at the moment.”

“Rising inflation remains a big concern that needs to be very carefully monitored,” Higgins said, adding that while conditions in Cambodia remain quite buoyant, global issues mean the outlook for 2012 is uncertain.

The Economic Institute of Cambodia, which estimated economic growth at 8.7 % in July, echoed Higgins’ sentiments.

“The impressive increase of garment exports, improvements in agri-business, especially rice milling, and the tourism sector bouncing back are helping the growth,” EIC researcher Khin Pisey said.

He added that it should take about six months for garment exports to be affected by the global downturn.

“[Garment] exports will be impacted next year, which means other sectors, such as tourism, agri-business and construction will play crucial roles in economic growth in the coming years.”   

However, Asian Development Bank senior economist Peter Brimble said he expects the slowdown of the global economy to have some effect on the Kingdom this year.

The “current volatility in global markets is expected to dampen the demand for Cambodian products in the second half of the year,” he said.

Still, “this is not expected to counterbalance the positive trends already observed.” 

In the first seven months of the year, garment and textile exports rose 43.3%, reaching US$2.33 billion. Meanwhile demand for agricultural exports, such as rice, cassava and corn, hit $245 million, a 186% year-on-year increase, according to data from the Ministry of Commerce.

MOST VIEWED

  • Negotiations on EBA being held

    In an effort to defuse tensions, a senior government official said Cambodia is negotiating with the European Union (EU) on the Everything But Arms (EBA) trade deal, which allows the Kingdom to export goods to the 28-member bloc tariff-free. The EU notified Cambodia on October 5

  • Ministers to tackle sea pollutants

    Preah Sihanouk provincial authorities and members of local communities have collected 77 tonnes of water hyacinth at a Sihanoukville beach, Preah Sihanouk Provincial Hall spokesperson Or Saroeun said. He told The Post yesterday that the aquatic weeds had been floating along some of the province’s

  • Chinese police escort deported scam suspects

    Ninety-one Chinese nationals accused of extorting money from victims in a Voice over Internet Protocol (VoIP) scam were deported from Phnom Penh International Airport on Monday under the escort of 182 Chinese police personnel. General Department of Immigration head of investigations Ouk Hay Seila told reporters

  • Sam Rainsy, government group set to clash at IPU Geneva meet?

    Opposition figure Sam Rainsy has been invited to speak at the General Assembly of the Inter-Parliamentary Union (IPU) in Geneva, according to a former Cambodia National Rescue Party (CNRP) lawmaker. A government delegation is also set to attend the meeting, a National Assembly press release