ADB forecasts Cambodia's growth at 7 pct this year, stronger next year

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Growth in Cambodia is set to ease moderately in 2014 before picking up in 2015 on the back of buoyant exports and robust agriculture and service sectors, a new Asian Development Bank (ADB) report said Tuesday.

The ADB Outlook 2014 said Cambodia's economic growth will moderate to 7 percent this year from 7.2 percent last year, with a subsequent edging up to 7.3 percent next year.

"Despite political uncertainty and the risk of further labor market tension, Cambodia is expected to exhibit healthy economic growth over the next two years, reflecting stronger exports, growing services, and strengthening economic recovery in the major industrial economies," said Eric Sidgwick, ADB country director for Cambodia.

The expected slowdown in 2014 reflects political tensions since national elections in July 2013 and strikes for higher wages by garment workers that dented investors' confidence and disrupted some production of garments and footwear in late 2013 and early 2014, the bank's outlook said.

"These uncertainties could dampen investment and weigh on tourism, construction and real estate activity this year," it said.

The bank noted that net foreign direct investment inflows were buoyant at 1.3 billion U.S. dollars in 2013, though that figure represents a slight decline from the previous year.

In 2014, growth in industry driven by exports of garments and footwear to the United States and European Union is projected to ease to 8.7 percent from 10.5 percent the year before, it said.

Services sector growth is expected to moderate to 7.1 percent this year from 8.4 percent last year, it added. Assuming favorable weather, agriculture is seen recovering from last year's floods to grow by 4.7 percent from 1.8 percent.

According to the bank, the prospect for higher growth looks brighter for 2015, supported by stronger economic recovery predicted for the EU and the United States--Cambodia's main export markets.

Average inflation is anticipated to edge up to 3.5 percent, and remain around this rate in 2015 as economic growth picks up, the bank said.

Cambodian Prime Minister Hun Sen said in February that the government predicted that the economic growth would exceed 7 percent this year as inflation is projected to remain low at 3-4 percent. Endi

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