Cambodian economy to grow 4.5 pct in 2010 -ADB

By Prak Chan Thul

PHNOM PENH, April 20 (Reuters) - Cambodia's economy, one of the fastest growing in Southeast Asia for a decade, may grow 4.5 percent this year after contracting 2 percent in 2009 due to the global economic crisis, the Asian Development Bank (ADB) said.

A pick-up in garment exports and tourism backed that forecast, Eric Sidgwick, the ADB's senior country economist, told a news conference on Tuesday, adding that the economy could grow around 6 percent in 2011.

However, he said Cambodia needed to diversify its economy to achieve sustainable growth in future.

"If you look at garments, the corner has now been turned," he said, noting that retail sales in the United States, a big market for clothes made in Cambodia, had risen 5.5 percent in the first quarter compared with a year before.

Tourism was also recovering and the sector had grown about 10 percent in the first quarter of 2010 compared with last year.

"And the good news there is that the Koreans and Chinese are coming back. They are both up around 30 percent in the first quarter," Sidgwick said.

A drop in visitors from those countries last year was offset to some extent by more arrivals from Laos and Vietnam. "But by and large, visitors from Laos and Vietnam spent less and stayed fewer days than counterparts from Korea and China," he added.

Construction was also recovering, although he did not forecast by how much.

Garment exports, tourism and the construction sector, which together account for over a third of GDP, all shrank last year.

In contrast, agriculture, Cambodia's fourth big growth driver accounting for some 30 percent of GDP, grew by about 4 percent because of favourable rain, and that served as a social safety net for many workers laid off in other sectors.

Diversification should involve both new products and new markets, Sidgwick said.
"If the Asian region is going to pick up, Cambodia needs to be able to take part in that to benefit from that," he said.

"You need to diversify the economic base to new areas so this means new products for export and new markets for exports -- not just the U.S. and EU, but hopefully more in the Asian region, where activities seem to be picking up much more."