Economic developments in Cambodia in 2016 have broadly unfolded as expected, says a new Asian Development Bank (ADB) report released today.
ADB, in an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2016, retained its forecasts for economic growth at 7.0% this year and 7.1% in 2017.
“The outlook for Cambodia’s economy, after attaining lower-middle-income status in July, remains robust with exports from the garment and footwear industry rising by 9.4% in the first half of this year,” said Samiuela Tukuafu, ADB’s Country Director for Cambodia. “While growth in credit to the private sector moderated to 28.1% year-on-year in June 2016, it still indicates buoyant domestic demand. Better weather since June, following an extended drought, should help a mild recovery in agriculture.”
Mr. Tukuafu said that ADB stands ready to continue supporting Cambodia’s inclusive economic growth through critical investments in agricultural productivity, transport and logistics, technical and vocational education and training, and financial sector development.
Fiscal policy is seen as supporting economic growth, with government spending rising by 15.6% in the first half of 2016 assisted by civil service wage increases, and revenue rising by 24.1% as the government continued to improve tax collection. The budget deficit excluding grants is targeted to widen to 4.3% of gross domestic product. Solid domestic demand and increased food prices lifted average inflation to a higher than expected 2.7% year on year in the first 6 months of 2016, after trending down to 1.2% last year. Inflation forecasts have been slightly increased in line with an expected rise in global oil prices, to an average rate of 3.4% in 2017.
Merchandise exports increased by an estimated 12.3% in US dollar terms in the first 6 months, faster than the 9.4% recorded in the first half of 2015. Growth in merchandise imports slowed to 7.3% from 17.0%. The current account deficit, excluding official transfers, is still seen to have changed minimally this year compared to 2015, and is expected to narrow in 2017 thereby maintaining Cambodia’s sound external position.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members – 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.