With the impact of the global financial crisis and economic slowdown, The International Monetary Fund (IMF) warned that Cambodian economy will face “serious challenges”. IMF projected that the growth rate of Cambodian economy would be falling below 4.8 percent in 2009.
According to Reuters, IMF said in its annual review of Cambodia that the crisis will potentially affect economic activity, capital inflows and the banking system in the Southeast Asian country.
IMF said that plans to ease fiscal policy in 2009 were “broadly appreciate” and recommended that the increase in the government spending target social and infrastructure projects.
“We expect some recovery at the beginning of 2010; for some countries, end of 2009. Of course, those forecasts are very uncertain, and it depends a lot upon the policy which may be implemented today and in the coming months,” said Dominique Strauss-Kahn, Managing Director of the IMF, quoted by the VOA as saying.
“One thing that is very important and interesting in the Cambodian case is that they had rather high growth last year, but it was the first time for a very long period. So for political reasons, historical reasons, growth had been rather low, and then they had a very strong increase…and then this increase and this recovery has just been destroyed by the crisis,” said Strauss-Kahn warning that donors’ countries being in crisis making their willingness to help and the amount which can be used for foreign aid will decrease, reported VOA news.
Cambodian Prime Minister Hun Sen said in the Third Cambodia Economic Forum on Thursday, February 05, 2009 that the Cambodian economy is still in good shape, even though it has been affected by the global financial crisis. He added that the government will try to maintain a six percent growth in 2009.
“Cambodia’s banking system remains strong in general, well capitalized and highly liquid, Hun Sen said, adding that bank loans and deposits continued to grow in 2008, reflecting public confidence in the banking system, according to Xinhua.
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