IMF trims Cambodia projection

       The International Monetary Fund revised down its forecast for Cambodia's economy yesterday, predicting that gross domestic product (GDP) would contract 2.75% in 2009.
       That is sharply lower than its previous forecast of a 0.5% drop.
       Speaking to reporters in Phnom Penh,IMF official David Cowen said the global economic crisis was having a more significant impact than previously expected on the kingdom's economy, which suffers from a narrow production base.
       Cambodia's economy rests on four key pillars - agriculture, tourism, construction and garments. The last three have all been badly hit by the crisis.
       The IMF noted that agricultural production was "a bright spot with a good harvest expected" this year.
       "Investment in rural roads and irrigation systems should raise productivity and reduce operating costs in the period ahead," the IMF stated.
       But the three remaining pillars have performed worse than expected. Garment exports, for example, are expected to decline 15%, a drop Cowen blamed in part on weak retail demand in the key US market, the destination for most Cambodian garments.
       But he said the country also remains less competitive than other garment exporters in the region, and as a result has lost some market share to countries such as Bangladesh and Vietnam.
       Tourism too has been disappointing if measured by spending rather than actual visitor numbers. The IMF said arrivals by air - typically indicating higher-spending tourists - had fallen "by double digits" due to the global economic crisis affecting visitor nations.
       "As a consequence, overall tourism spending is sharply lower, despite the increase in same-day and land arrivals from neighbouring countries," the IMF said.
       The remaining pillar - construction - has been hit hard with many projects shelved or put on hold following a property boom that ended abruptly last year.
       "New project approvals are sharply lower, and imports of construction materials are down significantly compared to 2008, with bank lending to the property (sector) also down," the IMF noted.
       Foreign direct investment is also expected to end the year sharply down,the IMF said, and is projected at $490 million this year versus an estimated $815 million last year.