Cambodia’s economy should grow about 7% this year and next, the Ministry of Economy and Finance said on Tuesday, adding that rapid real estate credit growth is slowing which would reduce a risk for the economy.
“Cambodia’s economic outlook remains robust,” the ministry said in a mid-year assessment. Growth last year was about 6.9%, it said, Reuters reported.
The worst drought in 50 years had affected agriculture but growth was driven by other sectors, helping the country avoid a slowdown last year, it said.
The International Monetary Fund also projected in July that Cambodia would grow by 7% this year.
But the IMF also warned that credit growth, at an average of 30% year-on-year, and increasingly concentrated in the real estate sector, put growth at risk. The IMF said the real estate sector was on a dangerous trajectory and needed to cool.
The ministry said that the central bank, the National Bank of Cambodia, had implemented measures and credit growth had slowed from 34% in 2014 to 30% in 2015. This year, credit growth would slow to about 22%, it said.
“While these are welcoming trends, policy makers need to be vigilant in closely monitoring the country’s real estate market,” the ministry said in its report.
Growth in the garment sector, Cambodia’s biggest foreign currency earner, remained strong while tourism and foreign direct investment were “less buoyant” due to Myanmar emerging as a competitor and a slowdown in China, the ministry said.
