IMF predicts continued good growth for Kingdom

IMF predicts continued good growth for Kingdom

Cambodia is expected to continue its 7 per cent growth trend for 2015, driven by strong economic activity in construction, real estate and garments, an International Monetary Fund (IMF) representative said yesterday.

The announcement was part of a consultation process conducted by the IMF for its executive board, and pegged last year’s growth at 7 per cent, but warned that rapid domestic credit growth and a stronger dollar could have adverse effects going forward.

“I think it’s important to note that given the close relationship to the exchange rate to the US dollar, strengthening of the US dollar could potentially weigh on Cambodian exports,” said Sonali Jain-Chandra, the IMF’s deputy division chief for Asia and the Pacific.

The garment industry, one of the mainstays of Cambodian exports, was projected to show steady growth, but could potentially slow down given certain external factors.

“A protracted growth slowdown in Europe or a stronger dollar would constrain garment exports,” Jain-Chandra said.

“Any erosion of competitiveness could adversely affect exports and investment.”

As foreign direct investment needs increase in the Kingdom, the IMF said weak growth in China could have a domino effect on certain local sectors.

“Weaker than expected growth in China would have a spillover through the FDI, banking and tourism channels,” Jain-Chandra added.

Faisal Ahmed, representative for the IMF to Cambodia, said the booming sectors of real estate and construction were contributing to increasing jobs, but needed closer financial stability monitoring.

“So we see that the sector is buoyant. There’s a lot of interest,” Ahmed said. “[But] there are also concerns of oversupply.”

Hiroshi Suzuki, chief economist at the Business Research Institute for Cambodia, said the government and private sector should both be prepared to handle such low-risk possibilities.

“These issues are only ‘risks’ and the IMF sees only limited effect on the Cambodian economy,” he said.

The release noted that strong revenue performance coupled with GDP growth had reduced fiscal pressures, causing the current account deficit to fluctuate in the medium term.

Inflation was expected to climb to 2.6 per cent after falling early in the year due to falling global oil prices.

The forecast was lower than the Asian Development Bank’s estimate earlier this year, which said that the Kingdom would grow by 7.3 per cent this year and 7.5 per cent in 2016, but, hewed closer to the World Bank’s projection of 6.9 per cent.

MOST VIEWED

  • Chinese influx pushing locals, Westerners out of Preah Sihanouk

    Some within the Kingdom’s tourism industry have speculated that the recent influx of Chinese visitors may hinder domestic tourism as the price of accommodations in the coastal city of Sihanoukville continues to rise. Preah Sihanouk province, which has become a hotbed for Chinese investment

  • ‘Dire consequences’ from sanctions, warns AmCham

    American businesspeople in Cambodia have warned that any sanction against the Kingdom would have “dire consequences” that could push Cambodia even further into the arms of China. In a letter to US senators and representatives dated Monday, the American Chamber of Commerce Cambodia (AmCham) said

  • Preah Sihanouk beach developments halted

    After receiving an order from Hun Sen, Minister of Land Management Chea Sophara led a team of experts and relevant officials to Sihanoukville to call a halt to the illegal development of a beach. The prime minister ordered the Prek Treng beach in Otres commune

  • CPP: ‘Behave or Sokha suffers’

    The ruling Cambodian People’s Party (CPP) spokesman warned Kem Monovithya on Thursday that her attempt to damage “national reputation and prestige” would lead to her father, Kem Sokha, receiving even harsher punishment. Sok Eysan issued the warning as Monovithya, who is the court dissolved