Cambodia’s GDP growth will drop to 4.7 percent in 2009, according to an Asian Development Bank report released Thursday that fell in line with a World Bank prediction released Wednesday of 4.9 percent growth for 2009.
The predictions come a month after an International Monetary Fund report that splits the difference, projecting 4.8 percent growth in 2009, less than half of the growth rate recorded from 2004 to 2007 and lower than recent projections offered by the government.
ADB country economist Eric Sidgwick said Thursday that given Cambodia’s economic situation and the world financial crisis, the predictions’ similarity is no surprise.
“When you experience a shock like the one that has happened now, when you see [garment] orders are down and you see tourism is taking a hit, when construction is slowing down, these are clear signs that the economy will slow sharply in the year ahead,” he said by telephone.
The projected growth rate for 2009 is significantly lower than the robust 10.2 percent GDP growth recorded in 2007.
The government needs to accelerate efforts to diversify the economy and expand agricultural and rural development to make the economy more resilient to external shocks, Sidgwick said.
“Cambodia is relatively insulated from some of the direct effects of the global financial crisis, but it will be affected indirectly by the reduction in external demand for Cambodian products,” he wrote in an e-mail.
The predictions from both the World Bank and ADB for 2009 are considerably lower than the government’s projection of 7 percent GDP growth announced by Finance Minister Keat Chhon.
Kang Chandararot, executive director of the Cambodia Institute of Development Study, said by telephone that he believes GDP growth will likely hit 6 percent in 2009 because of the record breaking amounts donors have pledged for 2009.
The government announced last week that donor pledges could reach surpass $1 billion.
“It will boost the economy. I would expect it will create public investment up to that level,” Kang Chandararot said. He added that GDP growth could be back into the double digits in 2011.
Kang Chandararot said he drew confidence from the fact that Cambodia has so much room for growth and can make itself more attractive to investors by improving infrastructure.
He added, however, that the government must generate more public dialogue about how the financial crisis will affect Cambodia.
“So far I haven’t seen any public discussion on this,” from the government, he said.
CPP lawmaker Cheam Yeap, who chairs the National Assembly commission on finance and banking, said Thursday that economic predictions can be incorrect and have proven to be so in the past.
“It’s just an evaluation and it could be right or wrong,” he said, adding that he anticipated GDP growth of between 5 and 6.5 percent for the coming year. “I cannot say if our evaluation is wrong or if theirs is,” he said, noting that lower predictions hurt confidence.
Chan Sophal, president of the Cambodian Economic Association, said the predictions of the ADB, IMF and World Bank are reasonable, but due to the uncertainty of the crisis the outlook could change. “Normally economists are good at forecasting but their forecasts can be wrong,” he said. “It could happen either way. It could be more favorable or less favorable.”
