PHNOM PENH, Sept. 26 (Xinhua) -- The Asian Development Bank (ADB) forecast Cambodia's gross domestic product (GDP) growth to maintain its strong momentum in 2018 with strong performances expected in exports and domestic demand, said its press release on Wednesday.

In an update of its flagship publication, Asian Development Outlook (ADO) 2018, ADB forecast the economic growth for Cambodia at around 7 percent for 2018 and 2019, in line with stable growth across most of developing Asia and moderate strength in the major industrial economies.

"Cambodia's economy continues to expand at a robust pace, propelled by strong export growth, robust tourist arrivals, buoyant domestic demand, and expansionary fiscal policy," ADB Country Director for Cambodia Sunniya Durrani-Jamal said in the release.

"Rapidly rising wages without increased productivity, however, could pose a major domestic risk, eroding Cambodia's external competitiveness, which still mainly relies on cheap labor," she said.

Merchandise exports rose by 13.3 percent and imports by 25.7 percent because of strong domestic demand in the first half of 2018, the release said.

It added that the current account deficit excluding official transfers will rise to 12.1 percent of GDP this year, up from 10.9 percent in 2017, but it is expected to narrow next year, though still exceeding the April 2018 ADO forecasts of 11.1 percent in 2018 and 10.8 percent in 2019.

The recovery of the tourism sector, which started early last year, has continued, mainly supported by tourist arrivals from China, the release said.

It said the overall balance of payment should remain in surplus due to strong inflows of foreign direct investment, leading to a further buildup in foreign reserves, from 9.1 billion U.S. dollars in July 2018 to around 10 billion U.S. dollars by the end of 2018, providing six months of prospective import cover.

Despite strong growth, inflation has been subdued, averaging 2.4 percent in the first six months of 2018, down from 3.4 percent a year earlier due to modest increases in food prices, the release said, adding that the average inflation rate is forecast to come in at 2.6 percent this year, and edge up to 3 percent next year.

The ADB's growth forecast was slightly higher than the Cambodian government's projection. The government has predicted that the country's economy was to grow 6.9 percent in 2018, pushing up the nation's GDP to about 24.5 billion U.S. dollars.