Through the debt crisis in the United States and European Union, including the natural disasters in the country, the government seeks to revive economic growth in 2011 at a rate of about 6 percent,” the economic minister said this week. Earlier this year, the Ministry of Economy and Finance forecasted economic growth in Cambodia to increase to 7 percent while the Asian Development Bank (ADB) also forecasted for 6.8 percent. “However, the cause of the debt crisis in U.S. and EU with the impacts from flooding in the country, the government attempts to revive the economy will mean a forecast of economic growth to 6 percent,” H.E. Keat Chhon, Deputy Prime Minister and Minister of Ministry of Economy and Finance said after the opening ceremony of the Conference on “2011 Commerce and Investment: Global Challenges and Cambodia’s Policy Response” on October 11 in Phnom Penh.
“As the United States and the European Union countries attempt to resolve their own debt has not been completed, resulting in products considered for export from Cambodia to the U.S. and EU markets lies in uncertainty, which also affects the economic growth of Cambodia this year,” he stressed. It is noted that the U.S. and EU markets are still threatened by a double recession in spite of recent positive growth.
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| H.E. Keat Chhon, Deputy Prime Minister and Minister of Ministry of Economy and Finance |
In addition, he pointed out that the flooding situation in the past two months is serious, which can affect the country’s economic growth this year.
This year’s flood disaster caused great loss in the country, especially in the area of infrastructure and rice fields.”
He said that in order to cope with the losses caused by floods, the government must have the responsibility to take emergency measures, including payment support and donated rice which will provide a variety of basic items which affects people to maintain their livelihoods and rebuild the national infrastructure. He mentioned that Cambodia’s economic growth rebounded in a V-shape form from 0.1 percent in 2009 to 6 percent in 2011, which is a result from big rebounds in the garment sector from 9 percent to 18.5 percent, and the tourism sector rose from 3 percent to 7 percent while the recovery of construction and real estate sectors remain uncertain.
“The industrial sector is projected to grow at around 8.5 percent, comparing with 13.6 percent in 2010, of which the garment industry will see growth of 11.2 percent, compared to 10.4 percent in 2010. Agriculture will see growth of 3.6 percent, compared with that of 4 percent in 2010 and the service sector will remain at 6.7 percent as was the case in 2010.”
“However, the riel value remains stable compared to the US dollar and the average annual inflation is going to be maintained at around 5.5 percent while international reserves continue to rise to US$ 3 billion as of July, which is equivalent to four months of imports.”
“For 2012, growth is projected to be 6.5 percent and inflation will be contained within 5 percent. The Exchange rate of US Dollar/Riel will be maintained at 4,050 while current accounts of the deficit will decline from 8.7 percent GDP in 2012 as export growth is expected to be greater than import growth. In addition, the budget deficit will decline from 6.73 percent of GDP in 2011 to 5.89 percent in 2012.”
The Minister emphasized that in order to cope with challenges from finical and economic crises during the last few years, will be laid out and adopt policies to actively manage key policy measures to contain and mitigate adverse implications from those crises. The key philosophy to overcome those challenges is to keep tight control of the national economic pulse and ensure a macroeconomic environment that is stable and favorable to economic activities especially ensuring the stability of the livelihood of the people.
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