Logo of Phnom Penh Post newspaper Phnom Penh Post - IMF predicts hard landing

IMF predicts hard landing

IMF predicts hard landing

Growth will slow and foreign reserves decline as crisis deepens

CAMBODIA'S economy will come under intense pressure in 2009 as tourism, garments and construction take a hit from the global slowdown, said the International Monetary Fund in a report this week.

"Cambodia's exceptional growth performance ... is coming under increasing strain from the global economic crisis and weakening external demand," said the annual report.

Foreign direct investment will decline and foreign reserves could fall to about US$1.9 billion, it said.

"Cambodia could experience a pronounced liquidity contraction and possible large reserve loss," the report says.

It predicts 4.8 percent growth in 2009, but IMF Resident Representative John Nelmes warns that the projection will be downgraded. "We are taking a close look at the growth projection.... Since November, when the projection was made, the global crisis has intensified," he told the Post Wednesday.

A UK-based emerging markets expert said that the IMF assessment is late coming. "The problems were apparent in autumn when there were large withdrawals of capital from the developing world because of worries over the credit risks." said Vanessa Rossi, senior research fellow at Chatham House. She said that the crisis is only beginning for countries like Cambodia. "[Analysts] haven't allowed for the fact that countries like Cambodia are dependent on foreign capital inflows.... If things don't improve soon, they will need an IMF bailout."  

Opposition leader Sam Rainsy said that the findings are no surprise. "The IMF seems to share my concerns and the views I have expressed.... We cannot afford to do nothing as the Cambodian government is doing right now," he said.

Related Story

MOST VIEWED

  • Cambodia-Thailand rail reconnected after 45 years

    A railway reconnecting Cambodia and Thailand was officially inaugurated on Monday following a 45-year hiatus, with the two kingdoms’ prime ministers in attendance at the ceremony. On the occasion, Cambodian Prime Minister Hun Sen and Thai Prime Minister Prayut Chan-o-cha travelled together from Thailand’s

  • Thousands attend CNRP-organised pro-democracy vigil in South Korea

    Thousands of supporters of the Supreme Court-dissolved Cambodia National Rescue Party (CNRP) on Saturday gathered in the South Korean city of Gwangju to hold a candlelight demonstration calling for the “liberation” of democracy in Cambodia. Yim Sinorn, a CNRP member in South Korea, said on

  • US Embassy: Chinese trade does not help like the West’s

    The US Embassy in Phnom Penh on Friday said relations between China and Cambodia did not create jobs or help industry when compared to the trade between the Kingdom and the US. “About 87 per cent of trade [with China] are Chinese imports, which do not

  • New airport study set for 2019

    A feasibility study on the construction of a new airport in the Kingdom will be launched later this year, according to a Ministry of Tourism spokesman on Monday. The plan was approved last week in a meeting held by the Ministry of Economy and Finance