Cambodia’s economy will expand 2.1 percent this year on the back of strong growth in the agriculture sector, Finance Minister Keat Chhon said Tuesday.
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A worker unloads locally produced bananas in Siem Reap. Minister of Finance Keat Chhon said Tuesday that agriculture would help prevent a Cambodian recession in 2009.
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The agriculture sector was expected to expand 5 percent this year despite the recent destruction wrought by Typhoon Ketsana, he said.
Economic growth would accelerate next year to 3 percent, he added, led again by agriculture but boosted by a slight recovery in tourism.
However, he expected the garment sector to continue to struggle in 2010.
“The US market still doesn’t have any purchasing power,” he told reporters on the sidelines of a four-day securities conference that opened Tuesday in Phnom Penh.
The United States takes around 70 percent of Cambodia’s garment exports. Ministry of Commerce figures show US buyers took just over US$1 billion worth of output from Cambodia’s garment manufacturers over the first eight months of 2009, down 29.9 percent from $1.42 billion a year earlier.
The forecast, which Keat Chhon said was based on figures from the National Institute of Statistics, is a downgrade from previous government predictions of 6 percent growth this year, and is in stark contrast to recent projections from the International Monetary Fund (IMF) and the Asian Development Bank (ADB), which he continued to reject.
“We are not interested in debating forecasts made by the IMF and the ADB,” he said. “Our forecast for growth this year is 2.1 percent. That is based on figures from our National Institute of Statistics.”
Downwards estimates
The ADB slashed its growth projection for Cambodia in September, saying its reliance on exports, tourism and foreign direct investment left it exposed to the effects of the global economic slowdown.
It said then it expected the economy to shrink 1.5 percent in 2009 before expanding at 3.5 percent in 2010 as a gradual recovery in the global economy stimulated clothing exports and tourism. The ADB predicted in March that Cambodia would grow 2.5 percent this year.
The expectation of a 1.5 percent contraction matches forecasts published by the Economist Intelligence Unit since September but positions the regional body as much more optimistic than the IMF, which in late September forecast a 2.75 percent contraction of the economy this year.
David Cowen, deputy division chief in the IMF’s Asia and Pacific Department, also singled out the agriculture sector as a bright spot on the economy. Like Keat Chhon, he predicted agriculture would expand 5 percent this year. He also said agriculture would drive the economy in 2010, which was expected to grow 4.25 percent with the appearance of “signs of recovery in other sectors”.
The National Committee for Disaster Management (NCDM) estimated earlier this month that Typhoon Ketsana cost Cambodia at least $29.3 million when it tore through the country.
The bulk of those losses hit farming sector, with 35,681 hectares of paddy fields and 2,071 hectares of other crops damaged, said NCDM Communications Officer Keo Vy.