PHNOM PENH, CAMBODIA (22 September 2015) – Cambodia’s economy is expected to remain strong through 2016, though it is likely to grow at a slightly slower pace than forecast earlier this year, according to a new report by the Asian Development Bank (ADB). ADB, in an update of its flagship annual economic publication , forecasts gross domestic product (GDP) growth for Cambodia of 7.0% for 2015 and 7.2% for 2016. In its March report, ADB projected growth of 7.3% for 2015 and 7.5% for 2016. The moderation reflects softer growth prospects for developing Asia, and a slow recovery in the major industrial economies.

“The expansion of garment manufacturing, construction and services—in particular tourism, finance and real estate services—continues to propel growth,” said ADB Senior Country Economist Jan Hansen. “Growth in exports and tourism, however, decelerated somewhat in the first half 2015, while agriculture has been affected by prolonged low rainfall.”

Mr. Hansen said that domestic demand appears to be holding up well with an expansion of credit to the private sector in May of more than 30% year-on-year, as well as high import growth. Garment and footwear exports climbed by 11.0% year-on-year, decelerating from 14.5% in the first half of 2014. Growth in total merchandise exports moderated to 14.0% from 18.3%. The garment industry faces increased competition from the appreciation of the US dollar, and from low-wage competitors including Myanmar. Growth of tourist arrivals softened to 4.6% in the first half from 5.2% a year earlier.

Inflation was just 1.0% year on year in May 2015, amid a decline in transportation and fuel costs following a sharp fall in oil prices. The inflation forecast for 2015 has been adjusted to 1.3%. ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.