Cambodia’s economy remains strong despite political turmoil, World Bank says
The economy is expected to grow by 6.9 per cent next year, slightly higher than this. Investments from China, Cambodia’s main economic partner, play a crucial role. Hun Sen remains defiant vis-à-vis foreign donor, especially the US and EU, which are threatening to end aid to protest against repression.
Phnom Penh (AsiaNews) – Cambodia's economy is expected to be one of Asia’s most dynamic, growing at a fast pace despite political turmoil and uncertainties, the World Bank said on Wednesday.
In 2018, the economy is forecast to grow 6.9 per cent, up from a projected 6.8 per cent in 2017,
Cambodia's political turbulence, including the dissolution of the main opposition party, has had little impact on economic growth, which has hovered around 7 per cent for the past six years.
The World Bank noted that textile exports had moderated and the construction sector showed signs of slowing, but other manufacturing exports have increased and Cambodia was also drawing more tourists – particularly from China.
"The outlook remains positive," it said in a report. "A possible slowdown of the regional economy, especially China, and potential election-related uncertainties, however, pose downside risks to the outlook."
World Bank senior country economist Miguel Sanchez said uncertainty had affected Cambodia in previous election years, leading to postponed investment decisions and a decline in foreign currency deposits. "It was temporary," he told a news conference.
Foreign investments are crucial, especially from China, which is now Cambodia's main economic and trading partner.
Cambodia is also leveraging donor support, although international governments have been threatening to block funding due to the growing internal repression that has struck the members of the main opposition party with particular violence.
On orders of Hun Sen, who heads the Cambodian People's Party (CPP), Kem Sokha, his greatest threat in 30 years, was arrested, and his party, the Cambodia National Rescue Party, disbanded. Sen also cracked down on media and civil society groups.
The government accuses Sokha and his party of treason and plotting to take power illegally. For critics, the charges are politically motivated ahead of next year’s parliamentary election.
Experts and analysts have warned that cuts to aid will adversely affect economic growth, especially Cambodia’s garment sector, which provides more than a million jobs.
Observers note that Cambodia relies heavily on trade preferences with the United States and the European Union to support that industry.
Still, Prime Minister Hun Sen remains defiant, saying he would “welcome” any withdrawal of aid and that Cambodia will rely on assistance from China for economic growth.