Briefing Notes for the Launch in Phnom Penh, March 2009
Growth performance and prospects
- The rate of growth dropped noticeably in Cambodia, from 10.2% in 2007 to 7.0% in
2008, the lowest since 2003.
- The impact of the global financial crisis started to be felt towards the end of 2008,
affecting in particular the garment sector, which accounts for over two thirds of the
country’s export revenue – with 70% of garment exports going to the United States.
- Garment exports dropped 27% in January 2009 (year-on-year).
- 30 garment factories closed during 2008 and 5 more closed in January 2009, with
30,000 garment workers losing their jobs in the last 12 months.
- Although the rate of growth of gross fixed investment is estimated to have increased
from 10.1% in 2007 to 19.2% in 2008, the global liquidity crunch made access to
financing more difficult towards the end of the year leaving to cancellations and delays
on FDI projects.
- Land and property prices fell sharply towards the end of 2008, discouraging investment
in real estate development.
- As of the end of February, GDP growth was forecast to drop to 5.5% in 2009.
Inflation and monetary policy developments
- Reflecting dramatic price increases in international commodity markets in the first half
of 2008, Cambodia’s inflation rate increased from an average of 5.9% in 2007 to
16.5% in the first quarter of 2008 (year-on-year) and 24.9% in the second quarter.
- However, inflation decelerated in the second half of 2008, as the price of crude oil and
other commodities plunged, reaching 13.5% in December.
- As inflation decelerated and the global financial crisis caused ripple effects in Asia
towards the end of 2008, the central bank cut reserve requirements for commercial
banks from 16% to 12% and lifted a cap on bank lending to the real estate sector in an
attempt to revive investment in construction.