Prime Minister Hun Sen yesterday called for more collaboration and integration of financial markets at the regional level, especially with China – the world’s second-largest economy – to offset the effects of a slowing global economy.
Mr. Hun Sen said that the global economy is facing slowing growth due to the lackluster recoveries in advanced economies and deteriorating growth in emerging economies. The economies of advanced countries are facing declining demand, while the emerging countries are seeing exports and investment decline, he said.
“In the context of the regional and global situation like this, I think that [it is] necessary to accelerate the integration… [of] the region… for spurring economic growth,” he said at a forum organized by the Bank of China in Beijing. His speech was posted on the website of the Council of Ministers.
“Financial cooperation is the major point which cannot be avoided,” he said at the “International Financial Exchange and Cooperation Program: One Belt-One Road” forum. Consistent and smooth cooperation at the macroeconomic level and sharing human resource development are necessary in the region, he told the forum.
Softer growth prospects for the People’s Republic of China and India, and a slow recovery in the major industrial economies, will combine to push growth in developing Asia this year and next year, according to the Asian Development Bank’s Asian Development Outlook 2015 released last month.
The ADB said that the gross domestic product (GDP) growth for the region would be 5.8 percent this year and 6.0 percent next year. In March it had a forecast of 6.3 percent for both years.
ADB chief economist Shang-Jin Wei said that Developing Asia is expected to continue to be the largest contributing region to global growth despite the moderation, but there are a number of headwinds in play, such as currency pressures and worries about capital outflows.
“In order to be resilient to international interest rate fluctuations and other financial shocks, it is important to implement macro-prudential regulations that, for some countries, may entail some capital flow management such as limiting reliance on foreign currency borrowing,” Mr. Wei said.
China’s economy is expected to expand 6.8 percent this year, down from 7.2 percent projected earlier, and below the 7.3 percent posted last year.
Prime Minister Hun Sen told yesterday’s forum that China does not only play a significant role in building regional collaboration but also has a rising influence globally.
He described yesterday’s forum as “a significant contribution in an effort of promoting the materialization of the Economic Belt and Silk Road of China.” These will connect economies and trade throughout Asia, Europe and Africa, Mr. Hun Sen said.
The ADB also revised downward its growth forecast for Cambodia this year, from its 7.3 percent forecast in March to 7 percent in September, citing slowing growth in emerging markets in the region as well as slow recoveries in major industrial nations.
Prime Minister Hun Sen also said the launch of Cambodia’s Industrial Development Policy 2015-2025 will strengthen the country’s economic base and attract more investment.
“The Royal government of Cambodia is actively promoting its new growth strategy through the launch of Industrial Development Policy 2015-2025 by mainly focusing on human resource development, continuing investment in transportation infrastructure, and bettering the trade facilitation,” he told the forum in Beijing.
He said the country was moving up the value chain from raw commodities to value-added products. In particular, greater focus is being placed on enhancing agricultural outputs, he said.