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Cambodia

Debating Cambodia's growth: A tsunami in 2009?

Stéphane Guimbert's picture

The global slowdown is hurting Cambodia's tourism industry, with fewer visitors in late 2008 than in the same period of 2007. Image credit: flydime at Flickr under a Creative Commons license.
Cambodia was one of the few Asian countries saved from the December 2004 devastating tsunami. But, a few days ago, at the Cambodia Economic Forum, panelists suggested that the economic tsunami – or various synonyms – would not spare Cambodia.

It's been a couple of months since the World Bank prepared the "perfect storm" report on the recent economic developments in East Asia. Our view at the time was that the crisis would reveal some of Cambodia's economic vulnerabilities – i.e. its lack of export diversification and its extreme reliance on foreign investment for growth. I think that this is an important lesson from our recent analysis on growth in Cambodia (more on this later).

Our projections for 2009 at the time were just below 5 percent GDP growth. This is consistent with the projections of the Government, the IMF, the Asian Development Bank, and an International Labor Organization (ILO) report on the impact of the crisis released yesterday. The Economist Intelligence Unit has a more pessimistic projection of 1 percent.

So who is right?

Regional roundup: Finance in East Asia – Feb. 11

James Seward's picture

Well, the bad news continues across the East Asia and Pacific region. The Financial Times just ran a long article on the "speed and ferocity of the region's economic downturn." The piece highlighted that the fast downturn was a result of Asia's over-reliance on export-led growth over the past decade. This follows the IMF's slashed growth forecasts for the large East Asian economies. It projected only 5.5 percent growth across developing Asia for 2009, which sounds great for most economies these days, but it is way off of the 7.8 percent posted last year.

The IMF is expecting only 6.7 percent growth in China, which is 1.8 percent less than what they forecast only in October. This contrasts sharply with the view of the World Bank's Chief Economist, Justin Lin, who just two weeks ago said he thought China could achieve the target rate of growth – 8 percent – this year because of fiscal stimulus spending.

Cambodia: Can we protect the traditional land of indigenous communities?

Stéphane Guimbert's picture

At the pace of development of Cambodia's economy, the pressure on these indigenous communities has grown quickly.
Last week, I joined a government team traveling to Mondulkiri, a little known province located some 500 km northeast of Phnom Penh, Cambodia. This was a long trip not only because of the distance, but also because of the quality of the road during the last couple of hours of the journey (although that will change quickly, as the road is being rehabilitated).

The province is really beautiful, with the road traveling first through a dense jungle and then arriving on more open hilly plateaus. The province has some very nice landscapes, as well as powerful waterfalls such as Boo Sra (see picture). We stayed in the provincial capital, Sen Monorum (which in Khmer means very enjoyable!), at one of the few hotels in the city. The whole province is very sparsely populated, with about two habitants per square kilometer.

Mondulkiri is one of the provinces with the highest proportion of minority groups (in fact "minority groups" are a majority of the population).

Programs offer children in poverty a headstart

Ariel Fiszbein's picture

In the last decade, conditional cash transfer (CCT) programs are probably the key social policy innovation around the world and in the East Asia and Pacific region. The targeted programs offer money to poor households on the condition they make pre-specified investments in the human capital of children. Typically, this involves school enrollment and attendance, and basic preventive health activities such as periodic checkups, growth monitoring, and vaccinations for young children.

Rice is expensive: a blessing or a curse for Cambodia?

Stéphane Guimbert's picture

A rice seller in one of Cambodia's markets. The price of rice, a staple food for Cambodians, has doubled between July 2007 and July 2008.
Last week, I attended a very interesting seminar by the Cambodia Development Research Institute (CDRI). They presented the result of their recent study on the impact of high food prices (which the World Bank and several others financed). I found the results, presented by CDRI’s Chan Sophal, very interesting, showing the complexity of the question.

The simple reaction is that higher price of food is bad for the poor. CDRI is able to confirm some of this by tracking prices (the price of rice doubled between July 2007 and July 2008) and reminding us that food accounts for two thirds of consumption for a poor family. And there will be little substitution effect to other goods (even within food, most of the caloric intake comes from rice, also very difficult to replace–although CDRI shows that Cambodians in part shifted to lower quality rice to make up for the higher price).


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