A slowing US economy, regional competition in garment exports and the reduced availability of credit in capital markets may slow the growth of Cambodia’s economy next year, the Asian Development Bank announced Monday.
The ADB is now forecasting GDP growth of 8 percent, down one percent from its predictions published in March.
“For 2008, the outlook has become somewhat clouded by increasing competition in clothing export markets from [China] and from Vietnam,” the Bank said in an update to its 2007 Asian Development Outlook, an assessment of economic performance in the ADB’s 43 member states.
ADB Country Director Arjun Goswami, however, said Monday that the macroeconomic picture in Cambodia remained largely positive.
“Certainly 2008 doesn’t look like a bad year,” he said, but added that forces beyond Cambodia’s shores had influenced the revised forecast.
The recent “credit crunch,” sparked by widespread defaults on costly US loans that has cascaded through global financial markets making credit more scarce and more costly, may affect Cambodia, he said.
“If credit does get constrained generally, financial institutions start looking more closely at their lending patterns. That does have an effect on growth,” Goswami said.
Finance Ministry officials could not be reached for comment.
Van Sou Ieng, chairman of the Garment Manufacturer’s Asso-ciation of Cambodia, said the downward trend in the industry may already have begun.
“We had a drop of 6 percent in exports last month compared to the same month last year,” he said.
“If that continues in the next two months then it will affect [gross domestic product],” he added.