Yearender: Cambodia's economic growth slightly eased in 2015 due to unfavorable weather

Cambodia's economy is expected to grow 6.9 percent in 2015, 0.1 percentage point lower than the forecast earlier this year, due to bad weather for agriculture, said Economy and Finance Minister Aun Porn Moniroth.

The Southeast Asian country's economy relies mainly on garment export, construction, tourism and agriculture.

"The government predicts the growth at 6.9 percent this year, slightly lower than the 7-percent-growth forecast earlier this year due to unfavorable weather for agriculture," the minister told the parliament earlier. "However, this growth is still high."

He said the country's GDP (Gross Domestic Product) is worth about 18.5 billion U.S. dollars in 2015, as the GDP per capita is expected to reach 1,228 U.S. dollars this year.

The Industrial sector is estimated to grow by 8.7 percent this year because of the surge in garment exports and construction sector.

The Service sector could see a 9-percent increase thanks to the rise in trade, tourism, hotels, restaurants and real estate, he said, adding that agriculture could achieve only 1 percent growth due to drought.

According to an agriculture ministry's report released last month, drought affected about 234,695 hectares or 9 percent of the 2.5-million-hectare rice seedlings this year.

The minister said the inflation rate is around 3 percent this year thanks to the decline in oil prices.

Nguon Meng Tech, director general of the Cambodian Chamber of Commerce, said the growth for 2015 remains high despite unfavorable weather.

"It is still a robust growth for Cambodia," he told Xinhua recently. "Such high growth will not happen if there is no strong effort from the government and active participation from the private sector."

Mey Kalyan, senior adviser of the Supreme National Economic Council, said Cambodia has achieved its economic growth of more than 7 percent per annum over the past 20 years.

According to the World Bank, Cambodia is one of the seven countries in the world that are called the Olympians of growth, he said.

"Generally, as the economy grows and its GDP gets bigger and bigger, the growth rate tends to slow down. This is also the case in Cambodia this year," he told Xinhua recently.

On whether the drought this year resulted from the impact of global climate change, he said it was difficult to prove that the drought was related to climate change.

"But we look at the big trend, as millions around the world agree with Paris COP21, the climate change in the world is real and coming very fast. Cambodia is not an exception, and according to experts, Cambodia's economy is very vulnerable to climate change," he said.

According to the government's document presented to the parliament early this month, the country's economy is projected to grow 7 percent in 2016, bringing the GDP to about 20.3 billion U.S. dollars.

The GDP per capita is forecast to hit 1,325 U.S. dollars next year, the document said, adding that the inflation is expected at 3.5 percent if oil and raw material prices on international markets continue to decline.

However, experts warn that the ongoing political dispute between the Prime Minister Hun Sen's ruling Cambodian People's Party (CPP) and Sam Rainsy-led opposition Cambodia National Rescue Party (CNRP) could have adverse effect on the economy and foreign direct investment if it lasts for long time.

Political tensions between the two parties have increased in recent months after two opposition lawmakers were beaten by a group of people while leaving the parliament in October, deputy opposition leader Kem Sokha was ousted as the parliament's 1st vice president, and opposition leader Sam Rainsy was removed from parliament following a warrant issued for his arrest over an old defamation conviction.

Chheang Vannarith, chairman of the Cambodian Institute for Strategic Studies, said that the unfolding political tensions between the main parties may cause political and social instability which in turn adversely impacts socio-economic development.

"Both domestic and foreign investors may be reluctant to further invest or expand their business activities in Cambodia," he said.

"Both parties need to return to a negotiation table and revive the culture of dialogue. Otherwise, Cambodia will not realize its potential and vision to become a middle income country in the next decade."

Mey Kalyan said all instabilities and uncertainties caused by any factors including the political one, are not good for the economic growth and foreign direct investment.

"It is particularly crucial for Cambodia as it is an open economy and is heavily dependent on foreign direct investment so the stability of Cambodia should be maintained for the economic development and prosperity of its people," he said.

"Some investors have already taken the 'wait and see' position, which is the cause of concern for the economic growth."

Mey Kalyan added that maintaining political stability and certainty is the first and foremost factor to ensure a sustainable growth next year.

"In addition, Cambodia needs to strengthen its competitiveness and to improve its climate for investment through upgrading human resources and skills, increasing infrastructure development, and optimizing regulations and procedures to facilitate investment," he said.

"A balanced and inclusive growth cannot be achieved without the development and modernization of the agriculture sector, which is still one of the main pillars of the national economy." Endit