July 19, 2012
Reposted from The Phnom Penh Post
By May Kunmakara
Slumping garment exports led yesterday to an official downgrade for Cambodian’s growth outlook this year – albeit a slight one.
Minister of Economy and Finance Keat Chhon projected 6.9 per cent year-on-year gross domestic product growth for 2012, down a tenth of a percentage point from the government’s original outlook of 7 per cent.
Year-on-year garment export growth slowed from 22.8 per cent in the first quarter of the year to about 12.8 per cent in the second quarter. “The lower prediction is due to a slow increase in garment exports in April and May this year,” Keat Chhon said at a National Assembly meeting yesterday.
The United States is the prime destination of Cambodian garment exports, followed by the European Union and East Asia.
GDP predictions skipped and bounced throughout last year as the government and international financial institutions tried to appraise the effects of Western financial turmoil and a devastating flood at home.
In May, the World Bank projected 6.6 per cent GDP growth for the year. Asian Development Bank said the Cambodian economy would grow by 6.5 per cent in 2012.
The modest downgrade, however, was not cause for concern among Cambodian economists. Chan Sophal, president of the Cambodia Economic Institute, said other industries would play a stronger role in generating GDP this year.
“We’ll definitely achieve 7 per cent GDP growth this year due to the promising growth we’ve seen in agriculture and tourism, he said. “I don’t believe garments will be significantly impacted by problems in Europe. It’s my personal opinion that our products are still on the level of basic consumption in Europe. They are still needed by the people.”
Slow growth and debt crises in the United States and Europe aren’t the only obstacles to garment manufacturing growth in Cambodia this year.
Claims against garment factories – in step with strikes – doubled during the first five months of the year, and industry insiders claimed idle factory floors would lead to decreased year-on-year export growth, the Post reported last month.
Photo Credit: National Geographic