WB raises Cambodia's GDP growth to 4.9% in 2010

via CAAI

October 19, 2010

The World Bank (WB) raised its projected GDP growth for Cambodia to reach 4.9 percent for 2010, increased 0.5 percentage point from its April's forecast of 4.4 percent, driven by a rebound in garment exports, tourism, and the uninterrupted growth of agricultural production, according to the WB's report on Tuesday.

"Apparel exports rose by 15 percent over the first six months of 2010, reflecting a pickup of shipments to the U.S.," said the WB's 2010 East Asia and Pacific Economic Update report. "This helped create 16,000 new jobs since January 2010 after a loss of 43,000 jobs in 2009."

It predicted that Cambodia's garment exports are expected to post a 14 percent growth this year.

Tourism picked by 12 percent in the first half and is projected to grow by 9 percent for 2010 as a whole.

Growth prospects in 2010 and 2011 depend on the performance of the agriculture sector, particularly, rice paddy, which benefited from the recent adoption of paddy production and rice export policy.

"The sector has weathered the global crisis well, but crop production might be negatively affected by the sporadic droughts in some parts of the country,"it added.

The exports of milled rice are up 3.5 times in the first half of 2010 year-on-year in value terms (the 6-month volume is already above the annual total volume exported in 2009).

The report stated that the recovery of foreign investment and construction remains at a much slower speed: construction and foreign direct investment (FDI) permit approvals remained subdued despite a slight increase of imports of construction materials (up by 5 percent) suggesting that recovery took place in small construction activities only.

The World Bank estimates Cambodia's FDI would grow to 639 million U.S. dollars in 2010 and 799 million U.S. dollars in 2011, up from 515 million U.S. dollars in 2009; and the inflation rate stands at 5 percent in 2010 and 2011.

In the first half of the year, revenues rose by 17.5 percent year-on-year while expenditures fell 3 percent.

"The increase in revenues was led by VAT, excise and import duties collections. Revenues also benefit from a doubling of the road tax on vehicles and the introduction of a property tax,"said the report.

In recent weeks, the Asian Development Bank and the International Monetary Fund predicted the Cambodia's growth for 2010 of 5 percent and 4.8 percent respectively. The forecast is in line with the government's prediction of the growth by 5 percent this year.

Source: Xinhua