July 25, 2017 / 12:21 PM / in 4 months

Cambodian economy to grow 7 pct this year and next, says IMF

PHNOM PENH, July 25 (Reuters) - Cambodia’s economic growth should stay at around 7 percent this year and the next as public spending and tourism offset a fall in private investment because of election uncertainty, the International Monetary Fund (IMF) said on Tuesday.

Cambodia’s opposition made big gains in local elections last month against veteran Prime Minister Hun Sen’s ruling party, raising the possibility of a tough battle in next year’s general election.

“We see some decline in private investment, in relation to the election-related uncertainties,” Jarkko Turunen, who led the IMF team on a visit to Cambodia, told a news conference.

But he said the growth rate should “remain robust” at about the same 7 percent figure as in 2016.

He highlighted risks such as credit growth averaging around 30 percent year-on-year, which is increasingly being concentrated in real estate. The ratio of bank credit to GDP was now close to 70 percent, he added.

The National Bank of Cambodia has moved to mitigate financial stability risks, including higher minimum capital requirements, Turunen said, urging authorities to keep up measures to improve resilience and tackle elevated financial sector vulnerabilities. (Reporting by Prak Chan Thul; Editing by Clarence Fernandez)

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