Cambodia’s economy continues to perform strongly, with an outlook that remains broadly positive, although rapid credit growth could pose a threat to economic and financial stability in the near future, the International Monetary Fund (IMF) said in a statement yesterday.
During a two-week visit to Cambodia—part of an annual consultation—an IMF mission assessed the country’s macroeconomic developments, and concluded that “economic growth is projected to remain robust—around 7 percent for 2016-17—supported by strong garments exports, real estate and construction activity as well the reduction in oil prices.”
Moreover, the team expects Cambodia’s current account deficit to narrow to 9.7 percent by the end of the year, from 10.7 percent in 2015.
Economic growth is expected to slow to around 6.25 percent by 2021 “due to a gradual reduction in foreign direct investment, challenges in export diversification and a moderation in the credit cycle”.
While the outlook was broadly positive, the international body identified some significant risks, particularly rapid credit growth, which it says it is increasingly concentrated in real estate.
The mission’s findings and recommendations will be presented to the IMF’s executive board for discussion.
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