PHNOM PENH, CAMBODIA (26 September 2017) — The Cambodian economy remains on track to grow strongly this year, says a new Asian Development Bank (ADB) report released today. In an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2017, ADB retained its forecast of slightly higher economic growth of 7.1% for 2017 and 2018, in line with strong performance across developing Asia and a recovery in the major industrial economies.
“Cambodia’s economy continues to expand at a robust pace, propelled by export diversification, strong construction and tourism activities, better weather conditions, and supportive fiscal policy,” said Samiuela Tukuafu, ADB Country Director for Cambodia. “Sustaining high and inclusive economic growth, and reducing poverty and vulnerability of the population will depend on Cambodia’s ability to stay competitive by boosting labor productivity. ADB is scaling up its assistance to the Royal Government of Cambodia starting from this year to support the government to improve productivity and develop value chains in the agriculture sector, improve connectivity, upgrade basic education and technical and vocational skills, and raise pro-development expenditure to further improve public service delivery.”
Merchandise exports as indicated by customs data rose by 7.7% and imports by 8.1% in the first half of 2017, while balance of payments data show merchandise exports increased by 20.7% and imports up by 11.1%. The current account deficit for this year and the next excluding official transfers is seen narrowing from the 10.8% of gross domestic product (GDP) recorded in 2016, but slightly exceeding the ADO 2017 forecast. Inflation averaged 3.3% in the first 7 months of 2017. Per month, inflation was highest at 4.2% in March and lowest at 2.3% by July due to softer fuel and food prices. The average inflation is forecast to come in at 3% this year, and edge up marginally to 3.2% next year.
Fiscal trends in the first 6 months of 2017 remained prudent and broadly supportive of growth, as envisaged in the 2017 budget, and the fiscal deficit for 2017 is expected to be close to the budget target, the equivalent of 4.3% of GDP. Following the implementation of macroprudential measures by the National Bank of Cambodia, growth of bank credit to the private sector continued to moderate to 16.5% in June 2017 compared to 28.1% in June 2016.
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 is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.