Tuesday, 8 April 2008

Cambodian economic growth to slow in 2008: UN

PHNOM PENH (AFP) — Cambodia's economic growth is expected to slow to 7.0 percent this year, the United Nations said Tuesday, warning that the country's exports remained too narrowly based on garments.

Growth is expected to be slower than last year, when the economy expanded by 8.5 percent, according to a report from the UN Economic and Social Commission for Asia and the Pacific (ESCAP).

While Cambodia's economy remains one of the region's most vibrant, "a key concern lay in the country's narrow export base which was considered vulnerable because of its dependence on garment exports," the report said.

The garment industry grew only 8.0 percent last year after suffering a dismal fourth quarter that saw orders plummet by nearly half, according to the World Bank.

The sector -- the country's largest source of foreign exchange -- faces increased competition from China and Vietnam, with further risks looming due to an economic downturn in the US, Cambodia's biggest market for textiles.

"For Cambodia, a significant slowdown of the US economy could have an economic fallout," said Suomi Sakai, acting UN resident coordinator.

Hang Chuon Naron, a secretary-general at Cambodia's finance ministry, said the government would try to prop up the garment sector by seeking higher wages for factory workers.

But he also said Cambodia needed to diversify its economy, and placed special emphasis on the country's tourism sector, which brought in 1.4 billion dollars last year.

Tourism revenues are expected to grow by at least 20 percent in 2008, according to the government.

The government "needs to look at how to ensure the development of tourism by developing the coastal areas," he said, adding that other tourism sites also needed to be created.

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