IMF says Cambodian economic growth to slow in 2009

PHNOM PENH, Cambodia (AP) — Cambodia's economy will grow by a modest 4.8 percent next year due to slowdowns in key sectors and a drop in foreign direct investment caused by the global economic crisis, the International Monetary Fund said Friday.

The projected decline for 2009 comes after several years in which Cambodia, one of the poorest nations in Southeast Asia, has enjoyed strong growth. The economy expanded about 10.3 percent last year, according to the IMF.

Finance Minister Keat Chhon said in April that the economy grew an average 11.1 percent annually in 2004-2007. The government has forecast a growth rate of 7.2 percent for this year.

David Cowen, IMF's deputy division chief for Asia and Pacific Department, said growth this year would drop to around 6.5 percent, the same projection given by the Asian Development Bank last month.

He spoke at a press conference wrapping up his two-week mission to discuss the economic outlook with Cambodian officials and donor representatives.

"After a robust start, growth momentum eased over the course of 2008, and more recently, the economy has begun to experience adverse effects from global financial stress," the IMF said in a statement.

Foreign direct investment in 2009 is expected to be 25-30 percent lower than the $750 million the country has received this year, Cowen said.

Cowen said Cambodia, which has a very narrow production and export base, will not be immune to the slowdowns seen in the U.S., Europe and Japan.

He said garment exports — Cambodia's main dollar-earning industry — will weaken further, as will the tourism industry.

Construction, which has benefited from a recent real estate boom, will also slow down "partly as a result of tighter global liquidity conditions," the IMF statement said.