Written by Meixner, Seth
The Phnom Penh Post
Cambodia's economic growth is expected to dip into the single digits this year, dropping more than three points to 7.0 percent, the International Monetary Fund said on June 6, citing a slowdown in the Kingdom's key garment sector.
But the decrease from 2007's growth of 10.25 percent is not likely to hurt Cambodia's position as one of the region's most robust economies, it said in a statement released at the end of a round of talks between IMF and senior government officials.
"Economic activity in Cambodia remains robust, although the pace of growth is expected to ease. ... The moderation mainly reflects slowing garment exports due to weaker external demand and heightened regional competition," the IMF said.
The garment sector is impoverished Cambodia's largest industrial employer – giving jobs to more than 330,000 people – and one of the main sources of foreign exchange.
But while exports topped $2 billion in 2007, orders plummeted by 46 percent in the last quarter of the year, raising fears that the industry would be badly shaken by increasing competition from China and Vietnam.
Inflation, which in January rose to 18.7 percent, will also hold back growth and continue to affect mostly poor Cambodians who have been hit hard by spiraling food and fuel costs.
"The mission shared authorities' concern with rising inflation and its adverse effect on the poor," the IMF said.
More than a third of Cambodia's 14 million people remain mired in poverty, living on the equivalent of $1 a day.
While record-high international oil and food prices have contributed heavily to inflation in Cambodia, domestic commercial bank lending, which increased 100 percent year-on-year in early 2008, has also flooded the economy with cash and added to inflationary pressures, the IMF said.
The government has tightened its monetary policies in an attempt to rein in inflation – including raising bank reserve requirements in a bid to curb high credit growth and reduce the demand for loans.
But the decrease from 2007's growth of 10.25 percent is not likely to hurt Cambodia's position as one of the region's most robust economies, it said in a statement released at the end of a round of talks between IMF and senior government officials.
"Economic activity in Cambodia remains robust, although the pace of growth is expected to ease. ... The moderation mainly reflects slowing garment exports due to weaker external demand and heightened regional competition," the IMF said.
The garment sector is impoverished Cambodia's largest industrial employer – giving jobs to more than 330,000 people – and one of the main sources of foreign exchange.
But while exports topped $2 billion in 2007, orders plummeted by 46 percent in the last quarter of the year, raising fears that the industry would be badly shaken by increasing competition from China and Vietnam.
Inflation, which in January rose to 18.7 percent, will also hold back growth and continue to affect mostly poor Cambodians who have been hit hard by spiraling food and fuel costs.
"The mission shared authorities' concern with rising inflation and its adverse effect on the poor," the IMF said.
More than a third of Cambodia's 14 million people remain mired in poverty, living on the equivalent of $1 a day.
While record-high international oil and food prices have contributed heavily to inflation in Cambodia, domestic commercial bank lending, which increased 100 percent year-on-year in early 2008, has also flooded the economy with cash and added to inflationary pressures, the IMF said.
The government has tightened its monetary policies in an attempt to rein in inflation – including raising bank reserve requirements in a bid to curb high credit growth and reduce the demand for loans.
5 comments:
BECAUSE CAMBODIA GOING TO THE RIGHT DIRECTION , WHICH DIRECTION ?
DOWN DOWN DOWN down down....
Just get rid of Ah Zimbabwean (Spam Rainxy) and Ah Khmer-Yuon, problem solves.
While record-high international oil and food prices have contributed heavily to inflation in Cambodia.
At least IMF frankly said about the inflation and the factors contributed to the inflation in Cambodia.
Cambodian people shall by now be aware and understand that Inflation is Global Trend and it is not soemthing that Cambodian creates for its own people.
By saying that it is meant that RGC shall ignore the issue but do their best in controlling the inflation. However, Cambodian people shall also be realistic that flactuation Feul cost is somehting people around the world are facing right now. RGC doesn't control the stock exchange around the world and the OPEX, what RGC could do is to look into lower the import tax and excise as low as possible [could not see that RGC could afford to abolish the tax and excise completely - no country in the world is doing so]
Another factor is the election paused most of new investments from coming in. Investors like to be sure before risking millions.
Because Ah Stupid Sam Rainsy organized too many demonstration and scared away all the investors. Fuck Ah Rainsy!!!!
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