EConomy

Presentation

From 2004-2007, the Cambodian economy expanded by more than 10% per year, with the garment sector and the tourism industry driving the growth, and inflation remaining relatively low. Growth slowed in 2008 with the onset of the global recession, and rising food and fuel prices pushed inflation into double digits. The economy is heavily dollarized; the dollar and riel can be used interchangeably. Cambodia remains heavily reliant on foreign assistance--about half of the central government budget depends on donor assistance. Foreign direct investment (FDI) has increased 12-fold since 2004 as sound macroeconomic policies, political stability, regional economic growth, and government openness towards investment attract growing numbers of investors.

Manufacturing output is concentrated in the garment sector, and garments dominate Cambodia's exports, especially to the U.S. The industry expanded rapidly from the mid-1990s until 2008, employing 350,000 workers and generating $3 billion in annual revenue at its peak. However, the global economic slowdown caused a drop in demand, resulting in over 50,000 workers being laid off in late 2008 and early 2009. Tourism, Cambodia’s other main foreign currency earner, has also been hurt by the global downturn. The number of tourists coming to Cambodia increased to approximately two million in 2008. However, in the first half of 2009 the industry contracted more than 15%. The service sector is heavily concentrated in trading activities and catering-related services. Exploratory drilling for oil and natural gas began in 2005. It is not yet clear if commercial extraction is viable or how large Cambodia's reserves are. If viable, commercial extraction is likely to start early in the next decade.

Main figures

• GDP (2008): $11.2 billion

• Per capita GDP (2008): $723

• Annual growth rate (2008): 6.5%

• Inflation (2008): 19.7%

• Natural resources: Timber, gemstones, some iron ore, manganese and phosphate, hydroelectric potential from the Mekong River, unknown quantities of oil, gas, and bauxite

Agriculture (29% of GDP, 2007): About 4,848,000 hectares (12 million acres) are unforested land; all are arable with irrigation, but 2.5 million hectares are cultivated. Products--rice, rubber, corn, meat, vegetables, dairy products, sugar, flour

• Industry (27% of GDP, 2007): Types--garment and shoe manufacturing, rice milling, tobacco, fisheries and fishing, wood and wood products, textiles, cement, some rubber production, paper and food processing

• Services (39% of GDP, 2007): Tourism, telecommunications, transportation, and construction

• Central government budget (2006): Revenues--$814 million; expenditures--$973 million; foreign financing--$213 million

• Trade: Exports ($4.1 billion, 2007)--garments, shoes, cigarettes, natural rubber, rice, pepper, wood, fish. Major partners--United States, Germany, U.K., Singapore, Japan, Vietnam. Imports ($5.4 billion, 2007)--fuels, cigarettes, vehicles, consumer goods, machinery. Major partners--Thailand, Singapore, China, Hong Kong, Vietnam, Taiwan, United States

• Economic aid received: Pledges of $698.2 million in grants and concessional loans for calendar year 2007. Major donors--Asian Development Bank (ADB), UN Development Program (UNDP), World Bank, International Monetary Fund, Australia, Canada, China, Denmark, the EU, France, Germany, Italy, Japan, Sweden, Thailand, the U.K., and the U.S.; 100% of the $601 million pledged by donors for 2006 was actually disbursed, according to the Cambodia Aid Effectiveness Report 2007

• Principal foreign commercial investors: Korea, China, Russia, Thailand, the U.S., and Vietnam

Evolution of the last years