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Cambodia among fastest-growing economies in 5 years: IMF
Publication Date : 10-10-2012
Cambodia is projected to be one of the fastest growing developing economies in the Asia-Pacific region over the next five years, the International Monetary Fund (IMF) says.
In its annual World Economic Outlook released yesterday, the IMF said that Cambodia was also expected to be the second-fastest growing Asean economy over the same period. Only Laos is forecast to expand more rapidly.
GDP growth in Cambodia is projected to reach 7.7 per cent in 2017.
The only developing Asian economies expected to grow faster are Bhutan (10.7 per cent), Timor-Leste (9.0 per cent, China (8.5 per cent) and Laos (7.8 per cent).
With GDP projected to expand by 6.7 per cent in 2015, Cambodia is similarly positioned against its regional peers with only the same four countries growing faster.
With slower growth of 6.5 per cent expected this year, Cambodia is eclipsed by the same four as well as Papua New Guinea, the Solomon Islands and Sri Lanka.
Despite the high pace of economic expansion over the next five years, the IMF says it expects Cambodia's inflation to remain low. Increases in consumer prices are forecast to be less than 5.0 per cent in 2012, 2015 and 2017.
The outlook, released in Tokyo where the annual meetings of the IMF and World Bank are taking place this week, came only four days after an IMF mission completed a 10-day visit to Cambodia.
An IMF statement released after the visit noted that "resilient exports, robust tourism, and a strong real estate recovery continue to support Cambodia’s economy despite the global slowdown."
Over the medium term, Cambodia’s growth rate could reach about 7.5 per cent "provided there is continued improvement in the business climate, infrastructure, and public service delivery," the statement said.
Despite the favourable growth outlook and recent export performance, "spillover risks from the still uncertain global recovery remain considerable," it warned.
"Potential downside risks in Cambodia could be a complicating factor, stemming mainly from potential labour market instabilities, extreme weather conditions, and rapid credit expansion affecting banks’ health."
At more than 30 per cent so far this year, the IMF noted that private sector credit growth was among the highest in Asia and being fuelled by easy domestic and global financial conditions as well as banks eager to lend.
The report also noted improvements in the power sector and rural infrastructure along with increasingly diversified foreign direct investment amid positive spillovers from Asia’s rebalancing. These "could provide a stronger-than-expected boost to Cambodia’s growth," it said.