growth

Could agriculture save Cambodia from negative growth?

Emerging from such a difficult history and sustaining double-digit growth continues to drive Cambodia quickly past many crossroads.

Debating Cambodia's growth: A tsunami in 2009?

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

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.

Some optimism during gloomy mood of Davos 2009

Chinese Premier Wen Jiabao as optimistically predicted his country’s growth in 2009. Image credit: worldeconomicforum at Flickr under a Creative Commons license.

I've seen quite a few stories this week about the World Economic Forum, which is entering its last two days in Davos, Switzerland. Not surprisingly, accounts coming out of the annual meeting have reflected the gloomy state of a global economy in the midst of financial crisis. Seems the event's past reputation of being a party for wealthy people and celebrities has been replaced with politicians, average government workers and others discussing – as the 2009 event has been dubbed – "Shaping the Post-Crisis World."

A story that stuck out at me came from the New York Times, which quoted Wen Jiabao, the Chinese premier, as optimistically predicting the country’s growth in 2009 at 8 percent. That’s pretty optimistic compared to many other economist predictions – some as low as 4 percent or less for the year.

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

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).

China’s 4th quarter GDP: glass half full?

You could read the new GDP data from China as very negative or surprisingly positive.

On exchange rates, think multilaterally

Image credit: frankenstein at Flickr under a Creative Commons license.

China experts to answer questions in live online chat

Amid all the news of the slowing global economy, I’m not sure anyone was too surprised that the World Bank’s latest China economic projections estimate the country’s economic growth, despite remaining relatively strong, will continue to slow in 2009.

Cautious optimism about condition of Chinese exports

We cannot be too optimistic on China’s exports, even though we think the country’s competitiveness is still strong. Image credit: scobleizer at Flickr under a Creative Commons license.

As we were looking at recent developments as background for our China Quarterly Update, which was released yesterday, we had to make up our minds about how well China’s exports are doing. This was necessary because there are conflicting answers to this question. On the one hand, we are reading many reports from the coastal provinces, Guangdong in particular, about how bad things are there in the export industries, with factories closing and migrant workers going back to rural areas. On the other hand, the data on overall export developments suggests exports have held up reasonably well so far, with overall exports in real terms still far outgrowing overall world import growth, implying continued gains in global market share for China (see left hand figure below).

An important part of the answer lies in the fact that the export performance differs markedly between sectors. Exports of light manufacturing products, such as textiles and toys, are by now lower than a year ago in real terms (see right hand figure below), while real exports of (higher value added) machinery and equipment are still growing by over 30 percent year-on-year. Exports of light manufactures have been hit by cost increases as well as weak overall foreign demand—which matters a lot because China now produces the bulk of global production in certain sectors, such as toys. On the other hand, China’s exports of machinery and equipment still occupy modest market shares globally, and China’s strong underlying competitiveness means that its exporters can continue to gain market share even in more challenging global circumstances.

Sustaining growth: China’s need for a new growth model

China’s big stimulus plan will help keep the economy growing at a healthy rate, though 2009 will be a rough year with probably the slowest growth in nearly 20 years. While China applies stimulus to deal with the immediate downturn, it would be good to be thinking ahead. China needs a new growth model, and it should evaluate its possible spending plans both in terms of immediate stimulus and in terms of contribution to this new growth model.

China needs a new growth model because after the global downturn comes to an end, exports will never again play the same role as they have in the past two decades. I would argue that the four basic principles that account for the Chinese miracle since 1978 remain valid, each of which needs some tweaking in the new environment.

China’s domestic market the target for European firms in the short and long run

For European firms producing relatively sophisticated, high-tech machinery, China’s domestic market is their main target for the long run.

China is slowing down--when and how to boost growth?

On the eve of the Olympics (I) - China’s economy is humming along

China’s growth has held up well so far in 2008 (take a look at the Bank's Quarterly Update for more details). Growth rate for the first half was slightly over 10%. Recently there has been concern about the slowdown in the growth of exports: from 28% year-on-year increase in May to 18% in June. But monthly figures are erratic, and I am more impressed t

Cambodia's Relative Peace Brings the Challenges of Growth

Workers scale one of the skyscrapers under construction in Cambodia.

Last Sunday, more than 8 millions Cambodians were called to vote. This is already the fourth general elections since the 1991 Paris Peace Agreement. Many – including me before I moved to our Phnom Penh office last summer – still connect Cambodia first to what we learned in history classes. The splendor of the Angkor civilization and the atrocities of the Khmer Rouge regime probably come on top of the list. And there is some truth to that. Angkor Wat and its neighboring temples remain magnificent. The Khmer Rouge regime has left deep stigma for the people and for the society. The Khmer Rouge tribunal is attracting a lot of international attention as well. Most landmine fields have been cleared, although there remain some in more remote areas.

But, for all this, this connection more and more misses a key fact: over the last couple of years, Cambodia has achieved a relative peace that has enabled dramatic social and economic change.

Asia internet growth outpaces that of all other regions worldwide

The Asia- Pacific internet audience grew last year 14 percent to 319 million visitors by April 2008, according to a recent report by one of the leading companies in measuring the digital world.

While the strongest proportional growth occurred in India with a 27 percent surge, that equals 28 million more internet users. China, following with a 14 percent growth, added however a total of 102 million users.

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