Cambodia’s economy is projected to moderate to 7 percent in 2019 after experiencing better-than-expected growth of 7.5 percent in 2018, said a new IMF report released on Friday.

The IMF predicts that the Kingdom’s economic growth will remain strong at 7% this year before easing to 6.8% next year.

“Economic activity remains strong with real GDP growth expected at around 7 percent this year, owing to continued export growth and strong construction activity, while inflation remains stable at around 2.5 percent,” the statement said.

The statement was released after an IMF team led by Jarkko Turunen visited Phnom Penh from Sept. 30 to Oct. 11.

Deterioration of external conditions is expected to lead to a slowdown in growth to below 7 percent in 2020, said Jarkko Turunen, who led the IMF team to visit Cambodia, adding that in the medium term, growth is expected to moderate further as the real-estate and credit cycles mature.

“Cambodia’s economic outlook is positive, although there are significant downside risks,” he said in a press conference here at the conclusion of the visit.

“The on-going Everything but Arms (EBA) review by the European Union — Cambodia’s primary export partner — could lead to a suspension of preferential trade access later next year, which could have a large negative impact on near-term economic activity,” he added.

Other downside risks include spillovers from rise in global trade protectionism, which could hamper exports and dent investor’s confidence, and weaker than expected global growth, Turunen said.

“Public debt remains low at 28.6 percent of GDP in 2018 and Cambodia is expected to remain at low risk of debt stress despite an increase in both debt disbursements and Public-Private Partnerships to finance needed infrastructure investment,” he added.

The Cambodia Daily