2015年-世界发展银行全球_Maintaining_High_Growth___Cambodia_Economic_Update_April_2015_35页_2mb

Summary of Cambodia Economic Update (April 2015)

Core Content

Cambodia maintained robust economic growth in 2014, with a real growth rate of 7.0 percent, slightly slower than previous years. The main drivers of growth were the garment sector, construction, and services (particularly finance and real estate). However, there were signs of slowing growth in the garment and agricultural sectors, which impacted the overall growth trajectory. Inflation eased significantly to 1.2 percent in 2014, supported by falling oil prices and weak food price inflation. The external sector remained stable, with foreign direct investment (FDI) playing a key role in financing the current account deficit. The financial sector continued to expand, with broad money growth reaching 29.8 percent year-on-year, and dollarization increasing further, with foreign currency deposits accounting for 82.6 percent of broad money. Poverty reduction continued, though at a slower pace, with the poverty headcount rate dropping from 17.7 percent in 2012 to 17.5 percent in 2014. Inequality also declined, with the Gini coefficient falling from 32 in 2008 to 28 in 2012.

Main Views and Key Information

Real Sector

• Garment Sector: Continued to be a major growth driver, but faced increased competition from the US dollar appreciation, new regional competitors like Myanmar, and past labor unrest.
  • Garment exports grew at 9.2% (value) and 11.2% (volume) in 2014, down from 17.6% and 13.4% in 2013.
  • The sector is diversifying its export destinations, with 26% of exports going to markets outside the US and EU in 2014.
• Construction and Real Estate: Remained resilient, supported by improved business confidence and political stability.
  • Construction permits approved in 2014 reached US$3.2 billion, a 17.5% increase from 2013.
  • Real estate prices continued to rise, but occupancy rates failed to keep pace with construction expansion.
• Tourism: Experienced a slowdown in growth, with a year-on-year arrival growth rate of only 6.9% in 2014, down from 17.5% in 2013.
  • The slowdown was primarily due to reduced arrivals from Vietnam and China, which were the largest markets.
  • Air arrivals continued to grow at a double-digit rate, while land arrivals declined.
• Agriculture: Previously a strong growth driver, now facing challenges due to depressed agricultural commodity prices and slow yield improvements.
  • The sector is expected to grow modestly in the near future.

External Sector

• Exports and Imports: Exports grew at 9.2% (value) and 11.2% (volume) in 2014, while imports remained stable.
• Current Account Deficit: Increased slightly to 11.2% of GDP in 2014, financed mainly by FDI concentrated in the garment, construction, and tourism sectors.
• International Reserves: Reached a record high of US$4.6 billion, equivalent to about four months of prospective imports.

Monetary Sector

• Exchange Rate: The Cambodian riel (CR) appreciated against the US dollar and the Euro, which may affect export competitiveness.
• Inflation: Declined to 1.2% year-on-year in 2014, driven by weak food prices and falling oil prices.
• Money Supply and Banking: Broad money growth doubled to 29.8% year-on-year, with dollarization increasing to 82.6% of broad money.
• Credit Growth: Increased to 31.3% year-on-year, with the loan-to-deposit ratio reaching 87.2%.

Fiscal Sector

• Revenue Collection: Improved to 16.1% of GDP in 2014, up from 15.1% in 2013, thanks to public financial management reforms.
• Expenditure: Remained at 20.5% of GDP, with the overall fiscal deficit (including grants) improving slightly to 2.5% of GDP.
• Government Deposits: Increased to US$1.1 billion in 2014, providing a larger fiscal buffer against shocks.
• Public Debt: Estimated at 33.9% of GDP by the end of 2014, still considered low.

Outlook

• Growth: Expected to moderate to 6.9% in 2015 and 2016 due to weaker performance in the garment and agriculture sectors.
• Key Sectors: Construction and tourism are likely to continue, but not enough to offset the slowdown in garment and agriculture.
• Downside Risks: Include potential renewed labor unrest, delayed European economic recovery, and increased competition from Thailand and Myanmar in the rice export market.
• Poverty and Inequality: Rural poverty is expected to decline more slowly, and inequality may not decrease in the near future due to growth in non-pro-poor sectors.

Emerging Challenges and Recommendations

Challenges

• Agriculture: Needs to improve productivity and competitiveness.
• Garment Sector: Faces increased competition and must adapt to new market dynamics.
• Tourism: Requires diversification and better infrastructure to sustain growth.
• Financial Sector: Must be monitored to prevent instability and speculative bubbles.

Recommendations

• Strengthen the Garment Sector: By maintaining labor market stability, improving the business environment, and enhancing the investment law.
• Diversify Agriculture: Through reducing logistics and business costs, improving access to finance, and increasing public investment in advisory services and infrastructure.
• Boost Tourism: By improving road transportation, enhancing coordination between central and local governments, the private sector, and communities, and promoting regional destinations.
• Enhance Financial Sector Stability: Through improved banking supervision and transparency in financial operations.
• Improve Public Spending Efficiency: Especially in health, education, and social protection to support long-term productivity and welfare gains.
• Broaden Tax Base and Strengthen Administration: To increase revenue and support development spending.
• Monitor Wage Increases: To ensure affordability and link them to performance and human resource management.

Selected Issue: Dollarization

Motivation

• Dollarization is a common practice in Cambodia to support macroeconomic stability and reduce inflationary pressures.

Background

• The riel has been gradually replaced by the US dollar in daily transactions, with foreign currency deposits making up a significant portion of the money supply.

Advantages

• Promotes price stability and reduces inflation.
• Facilitates trade and investment by providing a stable currency.

Disadvantages

• May reduce export competitiveness, especially against the Euro and US dollar.
• Increases vulnerability to external shocks, as the riel is not used in the money supply.

Ways Forward

• Enhance transparency in the monetary system.
• Explore alternative currencies or mechanisms to reduce reliance on the US dollar.
• Improve the competitiveness of exports through cost reduction and innovation.

Key Indicators

• Real GDP Growth: 7.0% in 2014, expected to moderate to 6.9% in 2015 and 2016.
• Poverty Headcount Rate: 17.7% in 2012, continuing to decline but at a slower pace.
• Gini Coefficient: Fell from 32 in 2008 to 28 in 2012.
• Public Debt to GDP Ratio: 33.9% in 2014.
• Broad Money Growth: 29.8% year-on-year in 2014.
• Government Deposits: US$1.1 billion in 2014.
• FDI Inflows: Supported the external sector and helped finance the current account deficit.