Cambodia’s economy may grow 8.7% this year

Tuesday, 13 September 2011 00:00 - - {{hitsCtrl.values.hits}}

PHNOM PENH (Reuters): Cambodia’s economy can grow as much as 8.7 percent this year, its strongest in a decade, propelled by a resurgence in its garments and tourism industries, Cambodian Prime Minister Hun Sen said on Monday.

The Cambodia government’s official estimate for economic growth in 2011 is 6 percent, but Hun Sen said that could be topped by a wide margin.

“There is a possibility of higher growth of 8.7 percent,” Hun Sen told a graduation ceremony at a university in the capital Phnom Penh, agreeing with an estimate by a local think-tank, the Economic Institute of Cambodia (EIC).

Hun Sen, however, cautioned that “unclear economic situations in the U.S. and Europe” will affect the country and that Cambodia should diversify its economy into other sectors such as agriculture and mining.

After decades of war and upheaval, including the Khmer Rouge “killing fields”, Cambodia witnessed an unprecedented boom before the global financial crisis, its economy expanding at around 10 percent annually in the five years leading up to 2008.

EIC economist Neou Seyha said the garment sector generated the country’s strongest source of growth and was projected to bring $3.5 billion in exports this year. That would compare with $2.9 billion last year according to the Commerce Ministry. “The garment sector is the driver of the economy while other sectors are beginning to recover,” he said.

Peter Brimble, the Asian Development Bank’s senior country economist in Cambodia, said Hun Sen’s 8.7 percent projection was “very different” to the ADB’s forecast of 6.5 percent.