Cambodia's economic growth will slow slightly during 2002, but is expected to
rebound in 2003, according to two new reports from the World Bank and the Asian
Development Bank (ADB).
The ADB Outlook 2002 report predicts growth of
4.5 percent during 2002 rising to 6.1 percent in 2003. The World Bank's East
Asia Update was in broad agreement. It stated that slower growth in garment
exports and tourism receipts were expected to give 2002 the lowest growth for
several years.
The ADB stated that the East Asia region is moving
towards a faster-than-expected economic rebound, with growth in neighboring Laos
PDR and Vietnam continuing to outstrip that in Cambodia. The ADB report
predicted Laos' economy would grow 5.8 percent this year and Vietnam 6.2
percent. Thailand, however, was looking at a mere 2.5 percent.
Funcinpec
secretary-general, Prince Norodom Sirivudh, said he would take the message about
Cambodia's economy to Davos, Switzerland for the World Economic Forum, which is
the global meeting for economic leaders.
"A lot of Asian countries have
challenged that [the region] must have our own economic forum," he said. "This
is a big challenge for Cambodia and for Asia as a whole."
The ADB said
prices in Cambodia have remained virtually unchanged over the past three years,
but forecast they would creep higher over the next two years. Inflation, which
was zero in 2001, will hit 2 percent this year and 3 percent in 2003 driven by
an increase in demand for goods and services. The exchange rate will likely
depreciate in line with inflation.
Both banks said the Cambodian economy
remained relatively strong last year despite the global economic slowdown. The
ADB concluded Cambodia's economy had grown at 5.3 percent in 2001, below the
rate of the previous year and below the government's target rate of 6.1
percent.
The agricultural sector expanded by 5 percent to account for
almost one-third of the economy. However, that growth rate is causing some
concern since it is likely to prove insufficient to reduce poverty in rural
areas where 80 percent of the population live.
Underemployment of
unskilled workers in Phnom Penh resulted in wage deflation last year. Despite
that, per capita incomes nationwide climbed 2 percent.
Cambodian exports,
mainly of agricultural products and garments, increased slightly to $1.35
billion last year from $1.26 billion in 2000. That, the ADB concluded, reflects
"a healthy external demand for Cambodian exports". The ADB estimated foreign
direct investment - a perennial problem for the Cambodian economy - at a mere
$120 million in 2001.
