PHNOM PENH, April 24 (Reuters) – Cambodia’s economy grew 7.5 percent last year, a four-year high, compared with 7 percent in 2017, helped by rising exports to the United States, the World Bank said on Wednesday.
Economic growth will slip to 7 percent this year, 6.9 next year and 6.8 percent in 2021, the bank predicted.
The World Bank said growth accelerated last year due to the rapid increase of garment and footwear exports to the U.S., increasing by 17.6 percent compared with 8.3 percent in 2017.
“The key drivers are actually garment and footwear exports to the U.S. and the European Union,” World Bank senior economist Sodeth Ly told a news conference, adding that the U.S. market grew faster than the EU market last year.
Cambodia’s imports of motor vehicles and steels rose 50 percent and 48 percent, respectively, in 2018, the bank said.
In a statement, the bank said risks to growth have “intensified due to heightened uncertainty” over preferential access by Cambodia to European markets and a “potential sharp slowdown” in the Chinese economy.
At present, Cambodia gets a trade preference from the EU known as Everything But Arms (EBA), making all Cambodia exports except arms duty free.
The EU accounts for more than one-third of Cambodia’s exports, including garments, footwear and bicycles.
In February, the EU started an 18-month process that could lead to the EBA suspension for Cambodia over its record on human rights and democracy.
The World Bank said that losing the EBA would likely result in slower export growth and given Cambodia’s heavy reliance on capital inflows from China.
China is Cambodia’s biggest aid donor and investor, pouring in billions of dollars in development assistance and loans through the Belt and Road initiative, which aims to bolster land and sea links with Southeast Asia, Central Asia, the Middle East, Europe and Africa. (Reporting by Prak Chan Thul; Editing by Richard Borsuk)