The International Monetary Fund (IMF) reiterated Friday that Cambodia had to diversify its export markets to cope with slower economic growth in the United States and Europe.
Krishna Srinivasan, director of the IMF’s Asian and Pacific Department, told a news conference in Washington that “those two markets are clearly affecting Cambodia’s growth.”
A one percent decline in U.S. growth “leads to an 0.5 percent decline in Cambodia’s growth,” he said.
“These are clear headwinds for Cambodia’s growth prospects. Now, one needs to diversify your trading partners and where you export.”
Cambodia’s free-trade agreements with China and South Korea as well as the Regional Comprehensive Partnership (RCEP) are “providing an opportunity to diversify your export markets,” Srinivasan said.
ASEAN: ‘TWO SETS OF FACTORS AT PLAY’
Asked about the growth prospects for ASEAN overall, the regional director said: “There are two sets of factors at play here.
“One is slowing growth in U.S. and Europe, because ASEAN countries do export quite a bit to U.S. and Europe. That is a headwind.
“At the same time, China is opening up, so there’s a tailwind there. So, you put the factors together, on balance we see improvement in our ASEAN’s growth outlook.”
Referring to Thursday’s announcement of an unexpectedly sharp year-on-year increase of 15 percent in China’s exports in March, Srinivasan noted that “a lot of the exports were to ASEAN countries …
‘NORMALIZATION OF SUPPLY CHAINS IN CHINA WILL HELP THE REGION’
“The linkages between ASEAN and trade and China are important and so normalisation of supply chains in China will help the region.”
In its World Economic Outlook released Tuesday, the IMF forecast growth to slow from 2.1 percent last year to 1.6 percent this year in the United States and from 3.5 percent to 0.8 percent in the euro area.
But China’s rate of expansion is projected to jump from 3.0 percent last year to 5.2 percent this year.
Among other countries in the 15-member RCEP — which took effect last year — Cambodia, the Philippines and Vietnam are forecast to grow at an even faster pace of around 6 percent, with Indonesia and Malaysia expanding by around 5 percent.
“Asian growth this year is expected to contribute 70 percent to global growth,” Srinivasan said.
INFLATION ‘STILL PRETTY HIGH’ IN VIETNAM
Asked about Vietnamese efforts to contain inflation, which is forecast to hit 5.0 percent this year, the regional director said: “We see inflation as still being pretty high.”
Srinivasan highlighted the importance of the central bank tackling the problem directly “so that you don’t have to tighten much faster later.
“If you lose it now, it can have a bearing on expectations and so on. So, I think it’s important for Vietnam to address inflation head on.”
LAOS ‘ENGAGING WITH THE CREDITORS ON SOME KIND OF A DEBT TREATMENT’
Asked about external debt in Laos, Srinivasan stressed the importance of the government raising revenues for a “credible and well-fleshed short, medium-term fiscal framework that can help reduce debt.
“Now, going beyond that, we’ve also been informed by the authorities that they’re engaging with the creditors on some kind of a debt treatment.
“We are not privy to that. But again, that’s something which could also help address the debt issue.”
SOURCE: AGENCE KAMPUCHEA PRESSE (AKP)