Logo of Phnom Penh Post newspaper Phnom Penh Post - World Bank forecasts strong growth barring major disruptions

World Bank forecasts strong growth barring major disruptions

The capital’s Exchange Square, where the World Bank has its offices, in August 2017. post staff
The capital’s Exchange Square, where the World Bank has its offices, in August 2017. post staff

World Bank forecasts strong growth barring major disruptions

Cambodia’s economy is expected to grow by 6.9 percent this year according to a report issued by the World Bank, while the report’s authors also acknowledged that several national and global risks could disrupt their prediction.

“Our base projections here anticipate a certain set of conditions, and in Cambodia we are assuming the election will take place as planned and will not destabilise the economy,” said Sudhir Shetty, the World Bank’s chief economist for East Asia and the Pacific, referring to the national election scheduled for July.

“There is the possibility there may be greater instability as a result in the future, after the election – and the growth we anticipate for Cambodia does not account for that,” he said.

Cambodia’s forecasted growth rate was the highest of the 14 countries analysed in the report, titled “Enhancing Potential”, and this year’s forecasted growth for nine Asean countries, excluding Singapore, was 5.4 percent.

Risks to those projections could arise in the near future, and Shetty warned that rising tensions between the United States and China could have a significant impact on economic growth across Southeast Asia if it led to tariffs on Chinese exports to the US.

Southeast Asia has developed a strong value chain of production for Chinese products, he said, and any negative impacts associated with tariffs placed on those products would ripple across the region.

“In 2018, we’re looking at global growth higher than any year since 2010 – but in our base case, the global economy is really firing on all engines,” he said. “This threat on a range of products injects uncertainty into that view of the global economy.”

The report notes several things that boosted Cambodia’s economic growth last year, including a rise in tourist arrivals and increased agricultural output due to favourable weather conditions.

However, it also notes that growth in the garment industry slowed to 7.7 percent last year, compared to 8.4 percent the year before. And while inflation and credit growth declined, credit to the construction and real estate sector increased rapidly – growing at 37.1 percent in November 2017, up from 28.4 percent in May 2017.

“Downside risks to the outlook include threats associated with the construction boom . . . and declining external competitiveness,” the report says. “As real wages rapidly increase, Cambodia’s external competitiveness, which primarily relies on cheap labour, is being eroded.”

Those concerns echo conclusions made by the Asian Development Bank in its economic outlook report earlier this week. That report noted that as wages in Cambodia rise, the country will have to make reforms to ensure it remains competitive in the region.

To address the risks associated with the rapidly expanding microfinance sector, the government should focus on increasing regulations and guidelines for lending, according to Miguel Eduardo Sanchez Martin, the World Bank’s senior country economist in Cambodia.

“In general, we think the Cambodian economy will continue to grow in 2018,” he said. “But of course, there are always going to be risks.”

MOST VIEWED

  • Wing Bank opens new branch in front of Orkide The Royal along Street 2004

    Wing Bank celebrates first anniversary as commercial bank with launch of brand-new branch. One year since officially launching with a commercial banking licence, Wing Bank on March 14 launched a new branch in front of Orkide The Royal along Street 2004. The launch was presided over by

  • Girl from Stung Meanchey dump now college grad living in Australia

    After finishing her foundational studies at Trinity College and earning a Bachelor’s degree from the University of Melbourne in 2022, Ron Sophy, a girl who once lived at the Stung Meanchey garbage dump and scavenged for things to sell, is now working at a private

  • Rare plant fetches high prices from Thai, Chinese

    Many types of plants found in Cambodia are used as traditional herbs to treat various diseases, such as giloy or guduchi (Tinospora cordifolia) or aromatic/sand ginger (Kaempferia galangal) or rough cocklebur (Xanthium Strumartium). There is also a plant called coral, which is rarely grown

  • Ministry using ChatGPT AI to ‘ease workload’; Khmer version planned

    The Digital Government Committee is planning to make a Khmer language version of popular artificial intelligence (AI) technology ChatGPT available to the public in the near future, following extensive testing. On March 9, the Ministry of Post and Telecommunications revealed that it has been using the

  • Cambodia returns 15M Covid jabs to China

    Prime Minister Hun Sen said Cambodia will return 15 million doses of Covid-19 vaccines to China for donation to other countries. The vaccines in question were ordered but had not yet arrived in Cambodia. While presiding over the Ministry of Health’s annual meeting held on

  • Wat Phnom hornbills attract tourists, locals

    Thanks to the arrival of a friendly flock of great hornbills, Hour Rithy, a former aviculturist – or raiser of birds – in Kratie province turned Phnom Penh tuk tuk driver, has seen a partial return to his former profession. He has become something of a guide