Cambodia economy to grow 6.9% this year, driven by exports: World Bank

Cambodia's economy is expected to grow 6.9 percent this year, driven by a recovery in textile exports, tourism and agriculture - Reuters

PHNOM PENH (Reuters): Cambodia’s economy is expected to grow 6.9% this year, compared with a 6.8% in 2017, driven by a recovery in textile exports, tourism and agricultural sectors, the World Bank said last week.

The growth rate will ease to 6.7% next year, the bank said, adding that risks include “potential uncertainty” related to the general elections due on July 29.

Cambodia, a top garment-making hub, has been the sixth fastest-growing economy in the world over the past two decades, with average GDP growth rate of 7.6%, according to the World Bank, largely due to garment exports.

“To maintain strong growth, it is essential that Cambodia invests more in education and skills training, while addressing the constraints facing small- and medium businesses,” said Inguna Dobraja, World Bank Country Manager for Cambodia, at a economic report launch in Phnom Penh on Thursday.

The World Bank recommended that authorities closely monitor a construction and real estate boom by developing policies that help to reduce speculative activity in the sector.

Some Western nations and the United Nations have voiced concerns that the July vote might not be free or fair after the opposition Cambodia National Rescue Party (CNRP) was banned by the country’s Supreme Court at the government’s request last year.

The CNRP was dissolved after its leader, Kem Sokha, was charged with treason for allegedly plotting to overthrow Hun Sen’s government – charges that the party had denied.

Rights groups and the opposition have repeatedly called on the European Union, the United States and others to impose targeted sanctions in the wake of Hun Sen’s crackdown on his critics. So far, the European Union (EU) and the United States appear reluctant to remove preferential trade access for Cambodia’s vital garments’ sector, Fitch’s BMI research unit said last month.

Supported by recovering global demand, Cambodia’s textile sector rebounded during the second half of last year, exporting $7.2 billion worth of goods, a 7.7% growth, slightly below 8.4% in 2016, the World Bank said.

Exports to the EU surged 7.4% in December from year-ago levels, versus a drop of 1.0% in May, the report said.

Exports to the United States in December rebounded, climbing 3.7% compared with a fall of 3.5% a year ago.

The World Bank said the government’s target of reaching 2 million foreign tourists by 2020 was feasible.