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Yearender: Cambodia's economy remains strong in 2013 despite political row, flood havoc: officials

English.news.cn   2013-12-19 08:22:38            

by Nguon Sovan, Wang Qibing,

PHNOM PENH, Dec. 19 (Xinhua) -- Cambodia's economy is expected to maintain the robust growth of over 7 percent this year even though the country is still trapped in political dispute and recovering from the aftermath of recent floods, senior officials and bankers said.

But some analysts predicted that political trouble, coupled with flood damage, would slash the country's growth to 6 percent this year.

"We're optimistic that the country still achieves over 7 percent economic growth this year, driven by strong garment exports, tourism and construction," Mey Vann, chief of the Financial Industry Department at the Ministry of Economy and Finance, told Xinhua.

"Our forecast is similar to that by the International Monetary Fund (IMF) and the World Bank."

Addressing to the National Assembly last month, Minister of Economy and Finance Aun Porn Moniroth said Cambodia's GDP (Gross Domestic Product) growth in 2013 was projected at 7.6 percent in equivalent to 15.19 billion U.S. dollars.

The country's per capita GDP was expected to reach 1,036 dollars this year, up from nearly 1,000 dollars in a year earlier.

"Cambodia will move from the status of a low-income to a lower- middle income country in the near future," he said.

The Southeast Asian nation's economy heavily depends on garment exports, tourism, agriculture and construction.

Apparel exports, the kingdom's largest foreign exchange earner, have made 4.76 billion dollars in the first 10 months of this year, up 24 percent year-on-year, according to the government's figures. Tourism has witnessed a remarkable growth with tourist arrivals increasing by 19 percent to 3.4 million during the first 10 months of 2013.

The construction has received a total investment of 2.48 billion dollars in the first 10 months of 2013, up 29 percent compared with 1.92 billion dollars over the same period last year.

Agricultural sector was expected a 4.2 percent growth this year even though about 4.4 percent, or 113,260 hectares, of the total planted rice paddy had been completely destroyed by floods between August and October.

"Despite suffering from flooding, rice production this year is still expected to achieve good harvests," Ouk Rabun, minister of agriculture, wrote in a flood damage assessment report to Prime Minister Hun Sen.

Phay Siphan, spokesman for the Council of Ministers, said the GDP growth is expected at over 7 percent and inflation rate at 3 to 4 percent this year.

"The government's commitment is to see at least 7 percent growth this year," he told Xinhua. "I don't think political dispute and flood damage could slow down the growth."

Political spat between Prime Minister Hun Sen's ruling party and the longtime opposition leader Sam Rainsy's party have begun since July's general election when the poll results indicated that Hun Sen's party won a majority of vote with 68 parliamentary seats and the Sam Rainsy's party earned the remaining 55 seats.

The opposition refused to accept the outcomes and has launched a series of mass demonstrations with a boycott of the ruling party- formed parliament since then in order to call for an independent probe into the allegedly serious irregularities during the poll, but the ruling party rejected the call, saying it was against the nation's constitution.

"Their boycott cannot cause crisis or political instability in Cambodia," Phay Siphan said. "Investors are still coming to Cambodia because they trust the country's political and macroeconomic stability under the leadership of the ruling Cambodian People's Party and Prime Minister Hun Sen."

In Channy, President and CEO of Acleda Bank, said there was no sign of economic slowdown despite political trouble and flood damage.

"Since the opposition has staged demonstrations peacefully, I do not see any impacts on economy and investors," he told Xinhua. "I notice that business transactions have been done as usual after July election."

Eric Sidgwick, country director of the Asian Development Bank ( ADB) to Cambodia, said the opposition's mass protests were unlikely to affect Cambodian economy and investment.

"Protests were peaceful despite some incidents, but not widespread, so I don't think that the protests have a big impact on economy and investment," he said in response to a reporter's question in a recent press conference.

The ADB said Cambodia's economy forecast at 7.2 percent this year, supported by buoyant exports and robust construction and service sectors, and the pace is expected to pick up to 7.5 percent in 2014 as recovery gains traction in Europe and the United States--the largest markets for Cambodian apparel products.

"Cambodia's economy is predicted to remain buoyant over the next two years, reflecting steady reforms and recovery in the traditional global markets," Eric Sidgwick told Xinhua.

IMF's Managing Director Christine Lagarde said the Fund projected a strong growth for Cambodia with a growth of 7 percent this year and next.

"Cambodia's economic performance is driven by its openness to the world," she said in a lecture to students at the Royal School of Administration during her visit to Cambodia in early December, emphasizing that the country has seen strong increases in garment exports, foreign direct investment, and tourism.

Lagarde recommended that Cambodia needed to invest more in education and physical infrastructure--especially in power facilities, roads, and bridges--in order to lay the foundation for future success.

But a senior economist said that the political row and recent flood would definitely hamper the country's growth this year.

"I don't think the country can achieve a 7-percent growth this year," Kang Chandararot, president of the Cambodia Institute of Development Study, told Xinhua.

"My prediction is that the growth is around 6 percent this year due to political trouble and flood impact on rice paddy and infrastructure."

He said prolonged dispute between the ruling and opposition parties was adversely affecting foreign direct investment to Cambodia.

"If the dispute remains unsolved for another year, its impact on economy and foreign investment will extend to next year as well, " he said.

Chheang Vannarith, lecturer of Asia Pacific Studies at the University of Leeds in Britain, shared Kang Chandararot's views, warning that the dispute could further slow down the economy next year if it remains unresolved.

"The political crisis in the post-election will have greater impacts on economy and investment next year if there is still no political breakthrough," he told Xinhua.

However, Minister of Economy and Finance Aun Porn Moniroth said the country expects a 7-percent GDP growth in equivalent to 16.9 billion dollars in 2014 as per capita GDP would increase to 1,139 dollars.

Chheang Vannarith, who is also an expert on the Association of Southeast Asian Nations (ASEAN), said Cambodia, if compared with other ASEAN economies, has enjoyed a relatively high growth rate, but the rate of poverty reduction is lower than other ASEAN countries.

"It means that Cambodia is facing with a serious widening development gap," he said, adding that to tackle this issue, the country needed to address corruption and promote good governance at governments of all levels and all social sectors.

"The government has to direct its development agenda towards an equitable and inclusive growth," he said.

One-fifth of the country's 14.8 million people are living under the poverty line, meaning that they could earn an income of less than 1.25 dollars a day, the government's figures showed.

Jayant Menon, lead economist of ADB's Office of Regional Economic Integration, said Cambodia was one of the fast-growing economies in ASEAN.

"The country has made significant progress on its journey towards the ASEAN Economic Community by the 2015 self-imposed deadline," he told Xinhua. Enditem

Editor: An
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