The Asian Development Bank (ADB) maintained its economic growth forecast for Cambodia at 7.1 percent for 2017 and 2018 buoyed by the strong performance of developing economies across Asia and the ongoing recovery of large industrial countries, according to a release yesterday.

In an update of its flagship annual economic publication Asian Development Outlook (ADO) 2017, Samiuela Tukuafu, ADB country director for Cambodia, said that the Kingdom’s economy continues to expand at a robust pace that is propelled by export diversification, growth in the tourism and construction sectors, and a supportive fiscal policy.

He added that sustaining high and inclusive growth was needed to reduce poverty but would depend on Cambodia’s ability to remain competitive by boosting labour productivity, which the ADB would help finance.

“ADB is scaling up its assistance to the Royal Government of Cambodia starting from this year to support [the] government to improve productivity and develop value chains in the agriculture sector, improve connectivity, upgrade basic education and technical and vocational skills, and raise pro-development expenditure to further improve public service delivery,” he said in the release.

The report noted that according to customs data merchandise exports rose by 7.7 percent for the first half of the year and imports increased by 8.1 percent, while balance of payments data showed that merchandise exports increased by 20.7 percent and imports up by 11.1 percent.

The current account deficit for this year and the next is expected to narrow to 10.8 percent of GDP, slightly exceeding the ADO’s initial forecast in April.

For the first seven months of this year inflation averaged 3.3 percent with a spike of 4.2 percent in March and a dip to 2.3 percent in July which the ADB attributed to softer fuel and food prices. Average inflation for 2017 is expected to be 3 percent and will likely edge up marginally to 3.2 percent next year.

Fiscal trends during the first six months of this year “remained prudent and broadly supportive of growth”, the report said, adding that the fiscal deficit for 2017 was likely on target to be equivalent to 4.3 percent of GDP.

Credit growth to the private sector continued to moderate to 16.5 percent for the first six months of this year at 16.5 percent, compared to 28.1 percent compared to the same period last year, the report added.