OREANDA-NEWS. Cambodia’s economy will continue to  expand in 2015 and 2016 due to stronger performance by trade partners—the United States, and Thailand, and to a lesser extent, the European Union—easing domestic political and labor tensions and lower fuel costs, says a new Asian Development Bank (ADB) report released today.

ADB’s flagship annual economic publication, Asian Development Outlook 2015 (ADO), says Cambodia’s gross domestic product (GDP) is projected to expand by 7.3% in 2015, up from 7.0% in 2014, and will climb to 7.5% next year. Robust domestic demand and stronger tax collection efforts narrowed the fiscal deficit excluding grants to an estimated 4.1% of GDP last year. The government replenished its deposits in the banking sector to the equivalent of 7.0% of GDP, approaching the 7.8% level maintained in 2008, before the global financial crisis. 

“With the stronger performance of the world economy and overall prudent macroeconomic management, the growth prospects for Cambodia over the next two years remain good,” said Eric Sidgwick, ADB Country Director for Cambodia. “Cambodia needs to continue to broaden its economic base and diversify sources of growth to support more sustainable and inclusive growth”.

Credit to the private sector expanded by an average of 27.3% in 2010-2013, and accelerated further to 31.3% in 2014—on the back of an increase in the ratio of credit to GDP to 54.6% last year from 45.0% in 2013—indicating a possible build-up of financial risks in the banking sector. Strengthening bank supervision and the regulatory framework, and closely monitoring lending for real estate investment will help ensure a stable financial sector. Inflation was 3.9% in 2014 and is expected to fall to 1.6% in 2015 due to lower fuel costs, before rising to 2.7% in 2016.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.