Economy of Cambodia

Economy of Cambodia
Modern high-rise building in Phnom Penh
Rank	120
Currency	Riel
Fiscal year	Calendar year
Trade organisations	WTO, ASEAN, AFTA
Statistics
GDP	$30.181 billion (2010)
GDP growth	6.5% (2011 est.)
GDP per capita	$2,470 (2011)
GDP by sector	agriculture: 33.4% industry: 21.4% services: 45.2% (2011 est.)
Inflation (CPI)	4.1%
Population below poverty line	25.8%
Labour force	8.8 million (2010)
Labour force by occupation	agriculture: 57.6% industry: 15.9 services: 26.5% (2010)
Unemployment	3.5%
Main industries	List Construction Cement Fishing Garments Gem mining Rice milling Rubber Textiles Tourism Wood products
Ease of Doing Business Rank	138th
External
Exports	$6.491 billion (2010)
Export goods	clothing, timber, rubber, rice, fish, tobacco, footwear
Main export partners	US 54.5%, Germany 7.7%, Canada 5.9%, UK 5.5%, Vietnam: 4.5% (2010)
Imports	$6.005 billion (2010)
Import goods	petroleum products, cigarettes, gold, construction materials, machinery, motor vehicles, pharmaceutical products
Main import partners	China 22.6%, Vietnam 12.7%, Hong Kong 12.4%, Thailand 11.9%, South Korea 5.4%, Singapore 5.4% (2010)
Gross external debt	4.338 billion (2010)
Public finances
Revenues	$1.4 billion (2010)
Expenses	$2.1 billion (2010)
Economic aid	$934 million pledged in grants and concessional loans for 2011 by international donors
Credit rating	B+ (Domestic) B+ (Foreign) BB- (T&C Assessment) (Standard & Poor's)
Foreign reserves	US$3.84 billion (2010)
All values, unless otherwise stated, are in US dollars

The Economy of Cambodia has seen rapid economic progress in the last decade. Per capita income, although rapidly increasing, is low compared with most neighbouring countries. The main domestic activity on which most rural households depend is agriculture and its related sub-sectors. Manufacturing output is varied but is not very extensive and is mostly conducted on a small-scale and informal basis. The service sector is heavily concentrated in trading activities and catering-related services. Cambodia has reported that oil and natural gas reserves have been found off-shore.

During 1995, the government implemented firm stabilization policies under difficult circumstances. Overall, macroeconomic performance was good. Growth in 1995 was estimated at 7% because of improved agricultural production (rice in particular). Strong growth in construction and services continued. Inflation dropped from 26% in 1994 to only 6% in 1995. Imports increased as a result of the availability of external financing. Exports also increased, due to an increase in log exports. With regard to the budget, both the current and overall deficits were lower than originally targeted.

After four years of solid macroeconomic performance, Cambodia's economy slowed dramatically in 1997-98 due to the regional economic crisis, civil violence, and political infighting. Foreign investment and tourism fell off. Also, in 1998 the main harvest was hit by drought. But in 1999, the first full year of peace in 30 years, progress was made on economic reforms and growth resumed at 4%. The long-term development of the economy after decades of war remains a daunting challenge. The population lacks education and productive skills, particularly in the poverty-ridden countryside, which suffers from an almost total lack of basic infrastructure. Recurring political instability and corruption within government discourage foreign investment and delay foreign aid. On the brighter side, the government is addressing these issues with assistance from bilateral and multilateral donors.

History

Main article: Economic history of Cambodia

Foreign aid

Rice milling is very important to the Cambodian economy.

Cambodia's emerging democracy has received strong international support. Under the mandate carried out by the United Nations Transitional Authority in Cambodia (UNTAC), $1.72 billion (1.72 G$) was spent in an effort to bring basic security, stability and democratic rule to the country. Regarding economic assistance, official donors had pledged $880 million at the Ministerial Conference on the Rehabilitation of Cambodia (MCRRC) in Tokyo in June 1992, to which pledges of $119 million were added in September 1993 at the meeting of the International Committee on the Reconstruction of Cambodia (ICORC) in Paris, and $643 million at the March 1994 ICORC meeting in Tokyo. To date, therefore, the total amount pledged for Cambodia's rehabilitation is approximately 12.3 G$.

Recent developments

2007 GDP (or gross monetarised product GMP)grew an estimated 18.6%, in line with the 2000/06 average of 9.5 percent. Garment exports rose almost 8%, tourist arrivals jumped nearly 35%, and construction activity doubled. With exports decelerating somewhat, the 2007 GDP growth was driven by consumption and investment. Foreign direct investment (FDI) inflows reached US$600 million (7 percent of GDP), slightly more than the country received in official aid. Domestic investment, driven largely by the private sector, accounted for 23.4 percent of GDP. Approximately 2,860 new businesses registered for operation in 2007, a 71 percent increase over 2006.

Although risks have increased, economic prospects for 2008 remain strong. The projected 7.5 percent growth rate for 2008 reflects a mix of growth in services (mainly tourism) and construction combined with a slowdown in garment exports. Export growth, especially to the US, began to slow in late 2007 accompanied by stiffer competition from Vietnam and emerging risks (slowdown in the US economy and lifting of safeguards on China’s exports). Although exports of cash crops have grown fast in recent years, developments in the garment industry have a major impact on Cambodia’s export performance. On the other hand, Cambodia’s exporters might benefit from the depreciation of the dollar. Another risk is uncertainties in the construction sector.

Social Issues in Cambodia

Main article: Social Issues in Cambodia

Statistics

Investment (gross fixed): 3% of GDP (2011 est.)

Household income or consumption by percentage share:
lowest 10%: 2.6%
highest 10%: 23.7% (2011)

Agriculture - products: rice, rubber, corn, vegetables, cashews, tapioca, silk

Industries: tourism, garments, construction, rice milling, fishing, wood and wood products, rubber, cement, gem mining, textiles

Industrial production growth rate: 5.7% (2011 est.)

Electricity:

• production: 1.273 billion kWh (2010)
• consumption: 1.272 billion kWh (2010)
• exports: 0 kWh (2010)
• imports: 274 million kWh (2010)

Exchange rates: riels (KHR) per US dollar - 4,395.62 (2011), 4,145 (2010), 4,139.33 (2009), 4,070.94 (2008), 4,006 (2007), 4,103 (2006)

References

• David Lempert, “Foreign Aid: Creating Conditions for the Next Civil War,” Phnom Penh Post, 16 / 01, January 12 – 25, 2007, available on the internet.

 This article incorporates public domain material from websites or documents of the CIA World Factbook.

See also

• List of Cambodian companies
• Natural resources of Cambodia
• Mineral industry in Cambodia
• Agriculture in Cambodia
• International Finance Complex

Critiques of contemporary economic circumstances

"Cambodia's Neoliberal Order: Violence, Authoritarianism, and the Contestation of Public Space " by Simon Springer, Department of Geography, National University of Singapore.