Cambodia’s economic growth is projected at 7.2 percent in 2013, picking up to 7.5 percent next year as recovery in Europe and the US takes hold, the Asian Development Bank (ADB) said in a report issued on April 9.

Private consumption, exports and investment, including strong and diversified foreign direct investment, will all drive economic development in 2013 and 2014, the Cambodian News Agency AKP quoted the report as saying.

The country’s industry is expected to expand by 10.5 percent in 2013, as European demand for Cambodian products is expected to grow steadily, supported by duty-free access to the European market, ADB further said.

Shipments of garments and footwear to the US will likely be subdued this year but should pick up after that, it added.

According to the report, net foreign direct investment inflows surged by an estimated 75 percent in 2012, to 1.5 billion USD, funding new industries including automotive parts, electronics, and processing of agricultural products.

The services sector is expected to grow by about 7 percent, with strong growth in tourism and real estate activity, while agriculture will likely grow by 4 percent.

Inflation is forecast to average about 3 percent in 2013, it said, adding that robust domestic demand is expected to result in higher inflation of 3.5 percent next year.

However, the report warns that while Cambodia’s growth prospects remain positive, chronic poor health and malnutrition is stunting the growth of 40 percent of Cambodian children.

Left unaddressed, Cambodia’s continuing high incidence of child malnutrition will negatively affect future productivity and economic growth due to the associated irreversible long-term damage to physical and cognitive development, it said.-VNA