IMF sees rapid credit growth as main risk to economy

[geovalin]

Cam McGrath

Cambodia's economy continues to perform strongly, but rapid credit growth must be contained to reduce the risk of economic and financial instability, and to ensure a “soft landing” of the credit cycle, the International Monetary Fund (IMF) said in a statement issued yesterday at the conclusion of its annual Article IV consultation.

“[Economic] growth is projected to remain robust around 7 per cent for 2016-17, supported by strong garments exports, real estate and construction activity as well as the reduction in oil prices,” an IMF mission concluded following a two-week visit to assess Cambodia’s macroeconomic developments.

The team expects Cambodia’s current account deficit will narrow to 9.7 per cent by the end of the year, from 10.7 per cent in 2015, on the strength of garment exports and less reliance on imported electricity following the completion of major hydro projects. Meanwhile, inflation is expected to edge up to 3.2 per cent on rising food prices.

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