Saturday, 7 June 2008

Cambodian inflation a concern as economic growth falls: IMF

June 6, 2008

PHNOM PENH - CAMBODIA'S economic growth will likely slow by more than three percentage points this year, while inflation is increasing sharply, the International Monetary Fund said on Friday.

Inflation rose to 18.7 per cent in January, powered by soaring fuel and oil prices, the IMF said in a statement after a week-long mission here.

The IMF said it shared Cambodia's 'concern with rising inflation and its adverse impact on the poor.'

IMF officials recommended the Cambodian government build up its central bank deposits to help contain inflation pressures, caused partly by the weakening local currency, which makes imports more expensive, the statement said.

The economy grew by 10.25 per cent last year but growth this year will be held back to around 7.0 per cent because of a downturn in garment exports, the IMF said.

While economic activity in Cambodia was still 'robust' from growth in tourism and higher prices for rice exports, the IMF said, but warned the country's poor are more vulnerable.

The garment 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 United States, Cambodia's biggest market for textiles.

Under-employment, where someone's work earns only a meagre return, remains high in Cambodia, which is one of the world's poorest countries.

Some 35 percent of the country's 14 million people live on under 50 US cents a day.

-- AFP

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