Just days after the International Monetary Fund predicted Cambodia will enter a recession this year, Prime Minister Hun Sen said Monday that dismal predictions about the country’s economic health are unimportant.
Hun Sen said that growth in agriculture will keep Cambodia from slipping into a recession even as the country’s main economic sectors decline.
“For us here, some people forecast 1, 2, 3, 4, 5 percent growth, which are very different predictions,” said Hun Sen, who himself earlier this year predicted the country would achieve 6 percent GDP growth in 2009.
“Now the important issue is not the prediction,” he continued in a speech at the opening ceremony of a pagoda in Kompong Speu province broadcast Monday evening.
“The [Asian] economic crisis in 1997 was like the goat dying and collapsing on an elephant’s foot. But now the elephant has died and collapsed on the goat,” Hun Sen said, referring to the US, Europe, Japan and Korea as pachyderms.
Agriculture is key, he continued.
“Agriculture is the main factor for our economic growth, which must be a nationwide effort,” Hun Sen said.
Hun Sen also said that he would not celebrate his 58th birthday on April 4, as it was better to not waste money on a celebration.
“No birthday! No acceptance of flowers. I won’t accept any birthday gifts or interrupt people’s plans,” he said.
SRP Lawmaker Yim Sovann said Tuesday that the government must acknowledge the reality of Cambodia’s dire situation, not hide from it, and must support a stimulus package of $500 million.
“If the government keeps hiding economic numbers, they will get hurt from its reflection,” Yim Sovann said, adding that while the IMF can make mistakes, those mistakes are of a technical nature and are not colored by politics.
“The government should not mix politics and technical issues,” he added.
Predictions on Cambodia’s economy in 2009 had been in the nearly 5 percent growth range only a few months ago. On Friday, however, the IMF added Cambodia to the list of nations facing declining economies. Cambodia will see its economy shrink 0.5 percent because of the global economic crisis and the fallout on the tourism, construction and garment sectors, the IMF predicted.
The Asian Development Bank has also indicated it will reduce its estimate of 4.7 percent GDP growth for 2009, but has not revealed by how much. Cambodian economic growth hit double-digit figures from 2003 to 2007.
Chan Sophal, president of the Cambodian Economic Association, said that a recession is something that the business community and especially government officials need to prepare for and acknowledge.
“It is very important,” he said. “If you know things before, you can be better equipped to deal with adversity.”
Those preparations could include a stimulus plan and rural development projects that absorb garment workers who have lost their jobs.
While agricultural production will grow this year and add to the GDP, it likely won’t grow enough to prevent a recession, he said, adding that food prices may decline this year, so farmers’ incomes may also decline.
Eric Sidgwick, the ADB senior country economist, wrote in a Monday e-mail that agriculture accounts for 27 percent of the country’s GDP and if weather is favorable and farmers respond to high prices the sector will do well, though he noted that prices are currently in decline.