PHNOM PENH (AFP)--Cambodia's economy will shrink by 0.5% this year, the International Monetary Fund said Friday, lowering its earlier prediction as the country is hit by the global financial crisis.
In a press statement the IMF said the poverty-stricken country wouldn't make the target set late last year of 4.8% growth in 2009.
"The global economic contraction and financial crisis are increasingly affecting Cambodia's economy," the statement said.
Cambodia has seen sharp declines in garment exports to the U.S. and Europe as well as fewer tourist visits, the financial institution said.
It added that there has been a rapid slowdown in construction and foreign investment as the country's economy is doused after enjoying several years of double-digit growth.
The statement recommended that the Cambodian government help stimulate growth by allowing its budget deficit to rise to around 4.75% of gross domestic product - a significant increase from its 2% deficit last year.
Despite recent growth, underemployment, where someone's work earns only a meager return, remains high in Cambodia, one of the world's poorest countries.
Some 35% of the country's 14 million people live on less than $0.50 a day.
In a press statement the IMF said the poverty-stricken country wouldn't make the target set late last year of 4.8% growth in 2009.
"The global economic contraction and financial crisis are increasingly affecting Cambodia's economy," the statement said.
Cambodia has seen sharp declines in garment exports to the U.S. and Europe as well as fewer tourist visits, the financial institution said.
It added that there has been a rapid slowdown in construction and foreign investment as the country's economy is doused after enjoying several years of double-digit growth.
The statement recommended that the Cambodian government help stimulate growth by allowing its budget deficit to rise to around 4.75% of gross domestic product - a significant increase from its 2% deficit last year.
Despite recent growth, underemployment, where someone's work earns only a meager return, remains high in Cambodia, one of the world's poorest countries.
Some 35% of the country's 14 million people live on less than $0.50 a day.
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