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ADB Revises 2011 Growth Rate Up Two Points

The textile industry is Cambodia’s largest, with some 300 companies providing jobs for an estimated 300,000 workers.

The Asian Development Bank on Wednesday said Cambodia would likely reach a 6.8 percent economic growth rate for 2011.

The ADB estimate was a bump up from the 6.5 percent forecast earlier this year, but much less than Prime Minister Hun Sen’s figure of 8.7 percent, which he said in a speech this week was possible.

In its “Asian Development Outlook” update, released this week, the ADB said garment exports to the US increased nearly 25 percent for the first half of this year, compared to the same period last year, the ADB said. Garments remain a major driver of the economy.

Tourism arrivals increased 13 percent in the same period, while “rice exports are on an upward trend,” Peter Brimble, the ADB’s senior economist in Cambodia, said in a statement.

“Cambodia will maintain solid economic growth for 2011 given the faster than expected recovery of garment exports and tourism as well as the positive outlook for the expansion of agricultural products,” he said. “However, the current slowdown in global trade is likely to temper growth momentum in 2012.”

Cambodia still has some “key challenges” to overcome, he added. The outlook report noted a “narrowly based economy” and the need to speed up economic diversification, improve governance and strengthen the investment climate.

“Reducing the high cost of transport, energy and diversifying agricultural products and the tourism sector are critical,” Brimble said. These will be addressed under ADB and Cambodian strategies through 2013, he said.

Meanwhile, inflation is expected to average 5.5 percent this year and next, the ADB said.