Cambodia's economy is forecast to grow at 7.2 percent this year, driven by continued robust growth of the garment and tourism sectors in combination with continued global recovery and political stability, the World Bank said in its Economic Update report released Monday.

"Economic growth for 2014 is projected to reach 7.2 percent based on a continued global economic recovery, the return of stability to the domestic economic environment and renewed confidence over the rest of the year," the report said. "Potential further political uncertainty and labor unrest and an economic slowdown in China may pose downside risks."

The report said the country's inflation is projected to remain in single digits over the short term.

"Cambodia's economy has withstood domestic pressures and managed to sustain its high growth," said Alassane Sow, the World Bank Country Manager. "This strong growth may help Cambodia to achieve its goal in reducing poverty by 1 percent a year."

Political dispute and wage hike demand in the garment industry remain hot issues in this Southeast Asian nation. So far, the country's main opposition party is still boycotting parliament after a contested election in July last year that handed victory to the Prime Minister Hun Sen's ruling party.

In addition, eight opposition-aligned trade unions are still demanding the government and the Garment Manufacturers Association in Cambodia to raise a minimum wage in the garment industry to 160 US dollars from the current 100 US dollars.

The government said the wage hike demand is too high to afford.