via CAAI News Media
Cambodia’s Growth is Expected 5 Percent this Year- PM
Wednesday, 17 March 2010 10:39 By Ek Madra
PHNOM PENH– Cambodian Prime Minister Hun Sen said Wednesday that this Southeast Asian nation’s growth is recovered at 5 percent for 2010 thanks to an increase in agricultural production and service sectors.
Hun Sen said that Cambodian inflation has declined and the country’s currency Riel exchange rate has kept stable with US dollar. While gross official reserves rose to $2.3 billion covering four months of imports from $2.1 billion.
He said Cambodia is to maintain the budget deficit quite significantly thought cautiously at “5 percent of GDP in order to sustain the recovery from the global economic crisis and to strengthen the foundation for growth as well as to fast track our economic diversification efforts”.
“Based on these latest indicators, we can say with confidence that the government, like others in Asia, has already led the Cambodian economy out of the difficult period of the crisis during which we can strictly maintain financial and macroeconomic stability as well as in society and the livelihoods of our Cambodian people,” he said.
The economy has been impacted by the global financial crisis which affected the country’s key real economic sectors, Hun Sen told an economic forum on the country’s economic outlook for 2010.
“However, the overall economic performance is not too bad as recent preliminary estimated GDP growth in 2009 would remain positive,” he said.
The Prime Minister did not say what was an estimated GDP growth for last year, but international financial institutions estimated contracted 2.2 percent and projected 4.2 percent for this year.
The kingdom’s s growth has been remarkably high in recent years was almost double digits, thanks to an increase of exports and flows in of foreign direct investment (FDI), before the global downturn hit in mid-2008.
Agriculture and service sectors continued to play a key role in contributing of the country’s economy, he said, at 5.4 percent and 2.3 percent respectively—offsetting the decline in other sectors such as industry at contracted 9.4 percent especially in the garment dropped by 9 percent.
“Strong performance in agriculture and rural economies has helped us to survive the crisis with significant damage and it will remain a potential engine of growth and poverty reduction over the medium and to long term,” he said.
The country produced more than 7 million tonnes of rice for 2009/2010.
Real estate business decline contract 2.5 percent. Tourism slowed down to 1.8 percent.
Cambodia received more than 2 million visitors in recent years and that figure is expected to increase 15 percent a year.
There also decrease in value of foreign direct investment to $500 million for last year, he said.
Cambodia’s Foreign Direct Investment (FDI) hit record $4 billion last year in 2006, according to the Council for the Development of Cambodia (CDC).
According to the National Bank of Cambodia (NBC) the FDI value for 2007 was US$866 million. It was US$795 million for 2008.
“But it is still significant to support the Cambodian economy,” he said.
“Thus the economy has been not much impacted through the financial sector,” said the Prime Minister.
He also said that Cambodian economy is highly depend on a sustained international trade expansion and foreign capital inflow and more than 90 percent of the banking transactions are dollarized.
He also said that Cambodia has to be wisely use the foreign aid, which has injected the country nearly $1 billion last year, for the social development in order to reduce poverty which is now 30 percent of the country’s total 14 population live below the poverty line of making less than a dollar per day.
“No body give us money to become rich, we have no ideas on how to live on our own,” he said.
Much of Cambodia's economy is dependent on agriculture, although it has some proven off-shore oil and gas reserves, a vibrant garment industry and booming domestic construction and telecommunications sectors.
Cambodia’s agricultural sector, both current and potential, is one of the great strengths of our economy, he said.
The sector continues to grow at around 5 percent per annum over the most difficult of times, he said.
“The government will make further efforts to strengthen agriculture as an important engine of growth and that will make a significant contribution to rural economies, poverty reduction and well-being of rural communities,” Hun Sen said.
Cambodian garment exports drops to $2.6 billion US in 2009.
The total value of garment, textiles and shoes exported last year dropped to $2.6 billion compared with $3.1 billion in 2008 as a result of global financial downturn, according to the figures of commerce ministry.
The total exports to the U.S., which is the Cambodian biggest garment market, was recorded $1.5 billion for last year compared to $1.9 billion in 2008, said the report.
The country’s Garment Manufacturers Association of Cambodia (GMAC) official shared statistics and did not see the industry to pick up for this year.
Kaing Monika, GMAC's spokesman, said “the international financial crisis has greatly impacted us, especially for our garment exports to the U.S. market.”
“It is too early to say if exports of the products to increase for this year given the purchasing orders from overseas reserve for exports till June, not through out this year,” he said.
The products exported to the E.U also dropped to $718 million last year from $786 million in 2008, said the report.
The total value of exports to Canada also lowered to $190 million in 2009 from $202 million in 2008. Exporting of the products to Japan and others Asian countries was recorded $233 million for last year from $178 million in 2008, it said.
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