World Bank revises up 2018 Cambodia GDP forecast to 7.1% from 6.9% in May
PHNOM PENH, NNA – Cambodia’s economy is expected to grow 7.1 percent this year, driven by domestic consumption and exports, the World Bank said in its outlook issued on Wednesday, revising up its forecast from 6.9 percent projected in May.
“The favorable longer-term outlook is boosted largely by rising FDI (foreign direct investment) inflows to manufacturing and agriculture, and improved supply chain linkages between FDI and Cambodian firms,” the World Bank said.
Domestic demand has been boosted by higher wage growth and larger public investments with fiscal expansion serving as stimulus, it said.
But fiscal expansion has resulted in widening of the overall fiscal deficit which is targeted to increase to 4.2 percent of GDP in 2018, up from 1.6 percent in 2017, the World Bank noted.
“Risks in the financial sector continue to build up, with large exposure to the construction and real estate sector,” it warned.
“Externally, risks are associated with the potential temporary withdrawal of Everything But Arms (EBA) preferences for Cambodia and potential spill-over effects of US-China trade disputes.”
The European Union has told Cambodia it is losing duty-free trading access to the EU market, the world’s largest trading bloc, over human rights violation.