An investor looks at the stock price monitor at a private security company in Shanghai Wednesday, as Chinese shares fell to a 22-month low. Analysts worry that weakened Asian markets could hurt Cambodia.By Ros Sothea, VOA Khmer
Original report from Phnom Penh
17 September 2008
Economic turbulence in the US and Asian markets this week will indirectly affect Cambodia's industries, even as inflation and other factors have weakened the economy so far this year, economic and finance experts said Wednesday.
The bankruptcy announcement by US financial firm Lehman Brothers and the sale of brokerage firm Merrill Lynch to Bank of America this week upset US and Asian markets and led to worries of a global economic crisis.
"The longer term concern is that the world economy will be impacted and that will have follow-on effects for Cambodia, but how big those effects will be remains to be seen," said Stephen Higgins, chief executive officer of ANZ Royal Bank.
Cambodian and international economists said Wednesday falling markets could harm Cambodia's leading sectors: garments and tourism.
The US is the top importer of Cambodian garments, and the sector, which is Cambodia's economic engine, already has seen weakened growth in 2008, analysts said. Tourism, the second-highest earner for Cambodia, could be hurt as potential visitors stay at home to weather the economic storm.
Cambodia could also be affected by a drop in foreign investment from its Asian neighbors.
"One thing that we would need to keep a close watch on is sort of providing finance to Cambodia in terms of foreign direct investment," said Eric Sidgwick, an economic officer at the Asian Development Bank in Phnom Penh. "You know, China, Korea, Thailand and other countries. How will they be affected by the turmoil in the US? They may in turn have less resources to bring to Cambodia."
Meanwhile, the Asian Development Bank said in an outlook report released Tuesday that Cambodia's economic growth would drop to an estimated 6.5 percent, down from 9.6 percent in 2007.
The decline in economic growth was a product of a garment sector suffering from the decline of US consumption, as well as inflation and the drop in value of the US dollar, the ADB said.
The bankruptcy announcement by US financial firm Lehman Brothers and the sale of brokerage firm Merrill Lynch to Bank of America this week upset US and Asian markets and led to worries of a global economic crisis.
"The longer term concern is that the world economy will be impacted and that will have follow-on effects for Cambodia, but how big those effects will be remains to be seen," said Stephen Higgins, chief executive officer of ANZ Royal Bank.
Cambodian and international economists said Wednesday falling markets could harm Cambodia's leading sectors: garments and tourism.
The US is the top importer of Cambodian garments, and the sector, which is Cambodia's economic engine, already has seen weakened growth in 2008, analysts said. Tourism, the second-highest earner for Cambodia, could be hurt as potential visitors stay at home to weather the economic storm.
Cambodia could also be affected by a drop in foreign investment from its Asian neighbors.
"One thing that we would need to keep a close watch on is sort of providing finance to Cambodia in terms of foreign direct investment," said Eric Sidgwick, an economic officer at the Asian Development Bank in Phnom Penh. "You know, China, Korea, Thailand and other countries. How will they be affected by the turmoil in the US? They may in turn have less resources to bring to Cambodia."
Meanwhile, the Asian Development Bank said in an outlook report released Tuesday that Cambodia's economic growth would drop to an estimated 6.5 percent, down from 9.6 percent in 2007.
The decline in economic growth was a product of a garment sector suffering from the decline of US consumption, as well as inflation and the drop in value of the US dollar, the ADB said.
5 comments:
Ki,
I'm not an economist but demands are moving south from China and east from Thailand to Vietnam, Laos, and Cambodia. There are more than just Chineses and Koreans are investing in Cambodia in the past few weeks (India, USA, Kuwait, etc...). imagine a few years from now? Not to take CPP side, to be fair I think Cambodia will grow much better than what you think.
hahahha you all rite mate while the Thai Economy USA ,Europe ect.crashing Cambodia is the tiny country depen on the foreigns aids has claimed they better of the long time business experianced country,oh God bless Cambodia
depend =correction
Dear Kith Meng,
You are already rich and successful! We admire you so much.
However, why do you still invest in sin businesses such as Casino, gambling, building Entertainment center (Rock Center) next door to University to destroy the future of young Cambodian as bambooshot of the nation.
Now, his Mobitel Advertisement is only about promoting young people to play game!
You are too rich already, why you still need to buy 1,200 seats National Cultural (Bassac) Theatre and replaced with shitty 300 small dyfunctional theatre? Why do you need to do harmful to Khmer culture?
Khmer culture has already received enough suffering and destruction.
Perhap, Kith Meng should spend more time to watch Khmer Art Performance rather then spending time at Naga Casino.
Its not the Economy that is my immediate worry in Cambodia but the Banks. For example acleda already has loaned more money that it has in cash, assets or securities so if everyone who has savings there went to ask for the there money back they could not. It would go bust. This is highly likely as its has loaned millions of dollars to people for land and building speculation. If this gambling does not work and does not return the benefits predicted then this will widen the gap further between its cash and debt. Its original backers dont have enough cash to support it if this happens and the cambodian government cannot bail it out like the Americans or english can and have. Welcome to the credit crunch people.
Damien
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