Economic turbulence in the US and Asian markets this week
will indirectly affect Cambodia's industries, even as inflation and other
factors have weakened the economy so far this year, economic and finance
experts said Wednesday.
The bankruptcy announcement by US financial firm Lehman Brothers
and the sale of brokerage firm Merrill Lynch to Bank of America this week upset
US and Asian markets and led to worries of a global economic crisis.
"The longer term concern is that the world economy will
be impacted and that will have follow-on effects for Cambodia, but how big those effects
will be remains to be seen," said Stephen Higgins, chief executive officer
of ANZ Royal Bank.
Cambodian and international economists said Wednesday falling
markets could harm Cambodia's
leading sectors: garments and tourism.
The US is
the top importer of Cambodian garments, and the sector, which is Cambodia's
economic engine, already has seen weakened growth in 2008, analysts said. Tourism,
the second-highest earner for Cambodia,
could be hurt as potential visitors stay at home to weather the economic storm.
could also be affected by a drop in foreign investment from its Asian
"One thing that we would need to keep a close watch on
is sort of providing finance to Cambodia
in terms of foreign direct investment," said Eric Sidgwick, an economic officer
at the Asian Development Bank in Phnom
Penh. "You know, China,
Korea, Thailand and
other countries. How will they be affected by the turmoil in the US?
They may in turn have less resources to bring to Cambodia."
Meanwhile, the Asian Development Bank said in an outlook
report released Tuesday that Cambodia's
economic growth would drop to an estimated 6.5 percent, down from 9.6 percent
The decline in economic growth was a product of a garment
sector suffering from the decline of US consumption, as well as inflation
and the drop in value of the US dollar, the ADB said.