Growth rate to plunge, IMF says

Written by Georgia Wilkins and Nguon Sovan

Monday, 10 November 2008 Phnom Penh Post

THE International Monetary Fund forecast a plunge in Cambodia's annual economic growth to 6.5 percent this year and 4.75 percent in 2009, half of last year's rate, citing plummeting foreign investment and adverse runoff effects from the global financial crisis. Officials meeting at the conclusion of the two-week IMF assessment said that, despite earlier predictions of immunity from downward global trends, declines in tourism and garment exports - a result of slowing partner economies - were behind the predicted downturn. "Following several years of very strong performance, Cambodia's economy ... has begun to experience adverse effects from global financial stress," the IMF said. Construction and ... foreign investment are slowing from high levels. According to David Cowen, IMF's deputy division chief for Asia and Pacific, foreign direct investment is expected to drop by up to 30 percent in 2009. "Construction activity and foreign investment are slowing from high levels, also partly as a result of tighter global liquidity conditions," the IMF said. Cambodia received US$750 million in foreign investment this year and relies heavily on exports to crisis-hit countries, such as the United States, which is the Kingdom's largest importer of Cambodian textiles.