ADB predicts rosier growth for Cambodia in 2017

By：Xinhua Update：2017-04-07

Cambodia's economy is expected to grow by 7.1 percent this year, a 0.1 percentage point higher than that of last year, said the Asian Development Bank (ADB)'s outlook report on Thursday.

The growth would be driven by solid garment and footwear exports, construction and real estate, tourism and a moderate recovery in agricultural production, the report said.

"While the short-term economic growth outlook for the Cambodian economy remains strong, labor costs and skills shortages are increasing," Samiuela Tukuafu, ADB's Country Director for Cambodia, said in a press conference.

He said speeding up implementation of the Industrial Development Policy 2015-2025 would lower the cost of doing business and improve productivity growth and competitiveness through regulatory reform and investments in infrastructure, logistics and a broader range of skills.

According to the report, growth in industry is projected at a slightly higher rate of 10.8 percent this year, supported by higher growth in major industrial countries and some diversification into products with higher value added such as garments, footwear, light manufacturing and electronics.

The service sector is forecast to expand by 6.7 percent, driven by buoyant domestic demand and tourism, while agriculture is expected to grow by 1.8 percent, assuming favorable weather.

It added that the growth in construction is projected to moderate.

The report said that higher international prices for oil and other commodities are expected to step up inflation to 3.4 percent this year, from 3 percent last year.

It also warned of downside risks, both domestic and external.

Domestic risks stem from vulnerabilities in the financial sector partly traceable to its rapid expansion, in particular the proliferation of microfinance institutions, it said.

On the external front, the risks are weaker growth in the euro area, a sharper-than-expected global tightening of credit, and a surge in the U.S. dollar, which could constrain exports and stiffen competition from other low-cost producers.