ADB lowers Cambodia’s economic growth to 6.4% in 2012 due to weak global demand

PHNOM PENH, Oct. 3 (Xinhua) — The Asian Development Bank (ADB) slashed Cambodia’s GDP growth to 6.4 percent this year, 0.1 percentage point lower than its April’s forecast of 6.5 percent, according to the bank’s Outlook 2012 Update released on Wednesday.

“Falling global demand, especially in Europe and the United States, means that the industry sector will grow at a slower pace this year,” said ADB Senior Country Economist for Cambodia Peter Brimble. “However, buoyancy in the services sector, particularly tourism, offsets to some extent the slowdown in garment exports.”

The bank predicted that Cambodia’s gross domestic product to grow by 6.4 percent in 2012 and 6.8 percent in 2013, a slight drop from ADB’s earlier projections of 6.5 percent and 7 percent in April.

Demand by major trading partners for Cambodia’s garment and footwear exports has softened this year, with U.S. imports of garments and footwear from Cambodia growing by only 2.6 percent to 1.5 billion U.S. dollars in the first 7 months of 2012, and imports to Europe increasing by 21 percent to 798 million U.S. dollars in the first 6 months, both decelerating sharply over 2011 levels, it said.

Dry weather has hurt agricultural production in some provinces, it added. Other sectors performing well include transport, finance, construction and tourism.

Approved investment in construction jumped by almost 85 percent to 1.4 billion U.S. dollars in the first 7 months, and tourist arrivals jumped by 27 percent to 1.8 million by mid-year, the bank said.

Inflation forecasts are lower than previous estimates both for this year and next, driven by more moderate price increases for food and fuel.

The bank projects inflation of 3 percent for 2012, with the rate picking up to 4.5 percent in 2013.

The ADB’s revised forecast is contrary to the prediction by the International Monetary Fund (IMF).

The Fund said Tuesday that Cambodia’s economy growth could grow as high as 7 percent this year, 0.8 percentage points higher than its April’s forecast of 6.2 percent.

Sourced: nzweek