A national research group forecasts 5 percent economic growth for Cambodia this year, a 1 percent increase over last year.
Sok Hach, a macro-economist at the Cambodia Development Resource Institute, said Wednesday that Cambodia’s economy will see economic recovery this year, citing projected increases in international aid, foreign investment and tourism.
But the agriculture sector is not expected to grow as much as the government forecasts because of low production and the lack of investment in agri-industry projects, he said. The CDRI projects only a 0.5 percent rise in agriculture, 3 percent less than the government projection.
The economic projections were distributed in a report to government officials and donors at a workshop Wednesday.
The projected 5 percent economic growth, Sok Hach cautioned, is contingent on the government implementing key monetary, judicial and security reforms, and only if Cambodia remains stable politically and socially.
According to the CDRI projections, foreign aid disbursement, in grants and loans, will be up by 37 percent from $205 million in 1999 to $280 million in 2000. Private foreign investment will grow by 20 percent from $150 million to $180 million, the research group estimates. And tourism will boom with a 30 percent increase of foreign visitors this year over 1999. In addition to tourism, construction and transportation will be the main engines of growth, Sok Hach said.
The agriculture sector will enjoy only marginal growth. Sok Hach said rice production for 2000 is projected at 3.56 million tons, only a 2.7 percent increase over 1999. Exports of fish production and timber also will be reduced this year and the majority of investment will still go to the urban areas, not the rural agricultural areas, he said.
With 5 percent economic growth, employment will increase, but not as much as Cambodia needs, CDRI said.
“But the 5 percent growth could not create employment opportunities enough to reduce poverty,” Sok Hach said. “Seven or 8 percent growth is needed to reduce poverty.”
Only about 30,000 new jobs will be created in the service and industry sectors, Sok Hach said. About 110,000 out of 140,000 new entrants into the labor market will remain working in farms or have informal jobs, the CDRI economic team forecasts.
In 1995 and 1996, economic growth was robust enough to absorb new entrants in the labor market, CDRI said.
CDRI’s team sees strong economic growth in the future, if Cambodia continues to be stable and progresses on its reforms.
“If the government fully implements key reforms, it is possible to have a 6 percent or more growth in 2001,” Sok Hach said.