Prime Minister Hun Sen yesterday warned about the impact to Cambodia of current protectionist trends in world trade and asked government officials to come up with strategies that will ensure the sustained growth of the local economy in the face of external risks.
Mr Hun Sen was speaking at a graduation ceremony in the Royal University of Law and Economics in Phnom Penh.
“Our goal is to achieve yet again a 7 percent growth of our GDP, so we need to prepare ourselves,” he said. “Protectionism is rising around the world, and this is certainly something that we must keep an eye on.”
“We need to learn from our experience of past crisis. The global economy is improving slowly, but the situation is actuality very volatile. It is crucial that we come up with a sound and sensible strategy to deal with this situation,” he said, adding that the goal should be to maintain macroeconomic stability and guarantee that living standards continue to improve.
“Salaries continue to increase for civil servants and members of our armed forces. However, if we cannot guarantee a stable macroeconomic situation, inflation will rise and the purchasing power of ordinary citizens will plummet. Thousands of farmers around the country will see their incomes shrink,” he said.
“This is a matter that needs to be addressed in our national policy to ensure peace in the nation.”
Christine Lagarde, managing director of the International Monetary Fund, said in April that the top priorities for the global economy are to steer clear of protectionism, guard against financial risks and foster long-term growth.
She warned that the trade conflict between the United States and China is creating uncertainty for businesses around the world and affecting global supply chains, and suggested that the best way countries can tackle global imbalances is by using fiscal tools or implementing structural reforms.
Vong Seyvissoth, Secretary of State of Ministry of Economy and Finance, said earlier this month that the ongoing US-China trade dispute actually presents a tantalising opportunity for Cambodia. He said the country can take advantage of the situation to increase exports to the US, the biggest market for Cambodian garment and footwear products.
“As barriers to export to the US increase in China, investors from the US will turn to other countries to invest and to set up factories from which they can import. Cambodia must take advantage of this situation.
“It is a big opportunity that we can only maximise if we are willing to undergo deep structural reforms,” he said, adding that the kingdom needs to improve its competitiveness by reducing the cost of electricity and transportation, as well as streamlining and facilitating trade procedures and diversifying its industry.
The IMF expects global growth to tick up to 3.9 percent this year and next, supported by strong momentum, favourable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States. The fund places GDP growth in Cambodia at seven percent for this year and the next.