Hun Sen rebukes World Bank

[PHNOM PENH POST]

Prime Minister Hun Sen yesterday rebuked the World Bank for revising downward its outlook for gross domestic product growth in the Kingdom, claiming the bank’s projections could cause market panic.

The premier also announced a new government projection of 6.4 per cent GDP growth this year, up from six per cent.

“The economists see this and that about flooding on the TV, and they make their assessment. So do not believe them too much,” Hun Sen said, referring to the World Bank yesterday changing its GDP outlook to six per cent from 6.5 per cent in March.

“Wait and see at the end of the year who is right and who is wrong,” he said.

At the 16th Government-Private Sector Forum held early yesterday at the Council of Ministers, Hun Sen attributed the new GDP estimate to Minister of Economy and Finance Keat Chhon.

Keat Chhon announced a GDP growth revision in October, changing the ministry’s initial seven per cent prediction to six per cent, the Post reported at the time. Hun Sen also expressed distaste with the World Bank’s outlook on Cambodia’s agricultural production in 2011.

The biannual report said growth in the sector, originally expected to increase by four per cent this year, would grow a mere 1.5 per cent.

“Any predictions can be made, but some predictions panic the market. Why is the price of rice going up? Because of those that make the predictions,” the prime minister said, adding that such predictions had a psychological effect on rice producers.

The World Bank made economic forecasts based on the information available at a given time, Enrique Aldaz-Carroll, senior country analyst at the World Bank’s Cambodia office, said yesterday via email.

Projections were subject to revision as new information became available and domestic and international conditions changed, he said.

Tuesday’s World Bank report listed domestic flood damage and economic turmoil in the US and Europe as the main reasons for the downgrade.

It also projected 6.5 per cent growth for 2012 and 2013, barring a deterioration in global markets.

Projections on Cambodia’s GDP growth largely fell within the same range. The International Monetary Fund increased its forecast from 6.5 to 6.7 per cent in mid-October, citing a stable real-estate sector and increased agricultural production, the Post previously reported. The Asian Development Bank upped its prediction from 6.5 to 6.8 per cent growth.

Hun Sen, however said during a speech in September Cambodia’s GDP would grow by 8.7 per cent in 2011.

“Prediction is prediction. What’s important is to look at the trends and not only the hard figures,” Kalyan Mey, a senior adviser to Cambodia’s Supreme National Economic Council, said yesterday, referring to the strong growth in manufacturing, tourism and construction, as well as less-than-expected growth in agriculture because of the recent floods.

A difference of half a percentage point among projections was normal and expected, Kalyan Mey said, as agreement was seldom found among economists and institutions because they adopted different approaches and made different assumptions.

Government projections tended to be higher than those of independent institutions, especially as Cambodia takes the ASEAN chairmanship and domestic elections draw closer, Cambodia Institute for Co-operation and Peace executive director Chheang Vannarith said yesterday.

“This is the time that Cambodia needs to prove to the region and the world that it is economically strong. There’s an election next year, so the ruling party needs to maintain economic growth,” Chheang Vannarith said. Higher projections helped the government’s image while also attracting investment, he added.