PHNOM PENH, Jan. 11 (Xinhua) -- Cambodia's economy is projected to continue its strong growth in 2019, driven by construction, garment export and tourism, the Singapore-based ASEAN+3 Macroeconomic Research Office (AMRO) said in a statement on Friday.
"Real GDP (gross domestic product) growth is estimated to remain strong at 7.1 percent in 2019 with continued support from robust construction activities, rebound in garment manufacturing and solid growth in tourism-related services," the statement said, adding that the 2018 growth was roughly 7.2 percent.
It said the financial sector remained sound, while banks' credit growth continued to moderate amid the implementation of stricter prudential regulations, including higher minimum capital requirements and liquidity coverage ratio.
The Capital Adequacy Ratios of both commercial banks and microfinance institutions have continued to be above the regulatory minimums, it added.
One of the major downside risks to the growth is the uncertainty of the Everything But Arms (EBA) preferential trade scheme that the European Union has granted to Cambodia.
The EU said in October last year that Cambodia could lose its special trade access to European markets under the EBA preferences, citing concerns over human rights and labor rights in the country.
The EU would take at least 18 months to decide whether to withdraw the EBA preferences for Cambodia or not.
"A suspension of the EBA status would substantially weaken its export competitiveness in the EU market," the statement said.
From the domestic side, major risks would stem from weakening external competitiveness due to a rapid increase in labor costs, it said.
On the financial sector, a growing credit concentration in the real estate and construction sectors and a rapid expansion of microfinance institutions may also heighten risks to financial stability, it added.
The statement was made based on an AMRO's annual consultation visit to Cambodia in September and data available up to Novomber last year.
Cambodian Minister of Economy and Finance Aun Pornmoniroth said Thursday that the country's economy roughly grew by 7.3 percent last year, supported by construction, garment export, tourism and agriculture.