Outlook for 2011-12

• The ruling Cambodian People's Party (CPP) will remain politically dominant in 2011-12. The CPP controls more than two-thirds of the seats in the National Assembly (the lower house of parliament).
• The apparatus of the state will continue to be used against the government's opponents, such as the opposition leader, Sam Rainsy, who remains in self-imposed exile after being sentenced in absentia to a total of 12 years in prison.
• Cambodia's economy is recovering, but growth will not return to the highs of around 10% that were recorded in the years preceding the 2008-09 global financial crisis. Real GDP will expand by 5.1% in 2011 and by 6.3% in 2012.
• Monetary policy will have to be tightened as inflationary pressures re-emerge in 2011, but the National Bank of Cambodia (the central bank) will not rush into raising the banking sector's reserve requirement.
• Consumer price inflation will accelerate to 6.1% on an annual average basis in 2011, mainly because of a rise in global commodity prices, but price growth will decelerate to 4.9% in 2012.
• The current-account deficit will remain substantial as a proportion of GDP in the forecast period, but Cambodia will avoid financing difficulties owing to its healthy foreign-exchange reserves and a recovery in foreign direct investment.

Monthly review

• Cambodian and Thai officials met in early April to prevent further clashes at the Preah Vihear temple. But the decision by the Thai foreign minister, Kasit Piromya, to boycott the talks suggests that progress will be slow.
• The prime minister, Hun Sen, has publicly disclosed his assets in line with a new anti-corruption law. But critics of the prime minister have questioned his claim to draw a monthly salary of only around US$1,160.
• The foreign minister, Hor Nam Hong, has asked the US to lower the interest rate on loans that it has made to General Lon Nol's government after 1970. He has also asked that 70% of the debt be converted into development assistance.
• The Asian Development Bank (ADB) expects Cambodia's economic growth to accelerate to 6.5% in 2011. However, the bank has called for diversification of the economy and improvement of the investment climate.
• According to the ADB, risks to Cambodia's recovery come mainly from external events, such as global economic weakness or higher oil prices.
• A number of construction projects in Cambodia are nearing completion, including a US$1bn luxury development on the island of Koh Puos, suggesting that the country's property sector may be on the cusp of recovery.