Cambodian economy to slow in 2009: World Bank

PHNOM PENH: Cambodia's economic growth will slow to 4.9 percent next year amid the global financial crisis, less than half the country's expansion pace of previous years, the World Bank said Wednesday.

"Cambodia, compared to many other countries in the region, is even more open to the external environment," Stephane Guimbert, the World Bank's senior economist for Cambodia, told a press briefing.

The Bank said Cambodia's economy averaged 11.1 percent growth from 2004 to 2007, but due to lower demand from other countries for its main industries - garments, construction and tourism - it has slowed to 6.7 percent this year.

Vikram Nehru, the World Bank's chief economist for East Asia and the Pacific, said the financial crisis has also come at an unfortunate time for the impoverished country's banking system.

"This particular crisis hit when bank credit was growing very rapidly, and now with the sudden decline of tourism and export earnings this is going to obviously hit the banking system as well," Nehru said by video from Tokyo.
"Cambodia was unlucky to be caught in the crisis at this particular time."

Unveiling the World Bank's update on the economies of East Asia, Guimbert said he believed the Cambodian government had been right to address slowing growth by including fiscal stimulus in its national budget for next year.

The Cambodian parliament this week approved a 1.8-billion-dollar budget for 2009 which included increased spending on education, infrastructure and agriculture.

Guimbert added that he thought Cambodia needed to improve the competitiveness of its garment industry by addressing labour disputes and facilitating trade, and that the country must invest more in agriculture.

"Although the price of rice has declined since May and June, it is still higher than before," Guimbert said, recommending farmers invest in fertiliser to increase their crop yields.

Despite the recent double-digit economic growth, underemployment, where someone's work earns only a meagre return, remains high in Cambodia, one of the world's poorest countries. Some 35 percent of the country's 14 million people live on less than 50 cents a day.