Economy of Cambodia

Cambodia Economy

Cambodia is a South East Asian country, characterized by a developing economy. With an area of approximately 181,035 square kilometers and a population of over 14 million, Cambodia’s economy is primarily agriculture based. The country borders Thailand, Vietnam and Laos. The densely populated plains are dedicated to rice and are the heartland of Cambodia.

In 2005, oil and natural gas reservoirs were found under Cambodia’s territorial waters and commercial extraction is expected to begin in 2011. Cambodia’s economy can thus expect an impetus that it has long been awaited.

Tourism is the second most contributing industry, besides agriculture, and adds a substantial amount to the Cambodian GDP. The country has a history of regional economic crises, political infighting and civil violence that ended in 1999. There was a dramatic slump in the economy during 1997-98. Tourism and foreign investment faced a major set back at this time. Cambodia’s economy resumed growth at 5.0% in 1999 and 2000, despite severe flooding. The economic grew at 6.3% in 2001 and 5.2% in 2002. Owing to remarkable expansion in the agriculture, garment, tourism and construction sectors, the Cambodian economy saw substantial 10% growth per year from 2004 to 2007.

The global economic recession of 2008 brought down the growth rate to below 7%. The per capita income of Cambodia is increasing swiftly but is lower than that of its various neighboring countries.

With over half of the population aged below 21, the economy suffers from high demographic imbalance. The level of education and productive skills are extremely low especially in the downtrodden countryside. Many areas experience a complete lack of basic infrastructure.

Cambodian Economic Profile: Highlights

Here are some of the highlights of Cambodia’s economy:

• GDP (purchasing power parity):

  • $27.92 billion (2009 est.)

  • $28.34 billion (2008 est.)

  • $26.99 billion (2007 est.)

GDP (official exchange rate): $10.9 billion (2009 est.)

GDP growth 10.3% (2008 est.)

GDP - per capita (PPP):

• $1,900 (2009 est.)

• $2,000 (2008 est.)

• $1,900 (2007 est.)

Unemployment rate:

• 3.5% (2007 est.)

• 2.5% (2000 est.)

• Population below poverty line: 35% (2004)

Inflation rate (consumer prices):

• -1% (2009 est.)

• 25% (2008 est.)

Cambodia Economy: Growth Efforts

Cambodia has identified job creation as its major challenge in the coming decade. It is now trying to establish an economic environment to enable the private sector to create enough jobs to bring some balance in the country’s demography. In order to fulfill its major requirement, the Cambodian government has approached the World Bank, IMF and other bilateral and multilateral donors. By the end of the first decade of the 21^st century, various international aid organizations are helping farmers to adopt crop diversification. However, corruption and instability at the political level discourage donors and foreign investment.

Macro Economic Monitoring & Forecasting (M&E) Service

Its macroeconomics and modeling capacity distinguishes EIC from other economic research organizations in Cambodia. To date, EIC is the only organization in Cambodia that possesses a Computable General Equilibrium Model, a Provincial Projection Model and a Detailed Demographic Model that can produce forecasts for the Cambodian economy for the short, medium and long term.

EIC's macroeconomics and modeling capacity also serves as a framework for sectoral and micro studies to follow, capable of taking into account the array of variables specific to the Cambodian context, such as macroeconomic supply and demand, demography, geographical inequalities, constraints to private sector growth, potential industry diversification and rural development, etc.

EIC's modeling capacity will help identify in detail the trend and the strengths and weaknesses of the Cambodian economy. With the ability to assess the economy's demand and supply, evaluate and rationalize financial needs for economic development, understand constraints and challenges facing the private sector, the institute's modeling activity will provide wide-ranging and essential economic data.

Economy of Cambodia

Economy of Cambodia
Rank	121th
Currency	Cambodian riel (CR) United States Dollar (USD)
Fiscal year	Calendar year
Trade organisations	WTO, ASEAN
Statistics
GDP	$105.13 billion (2011 est.)
GDP growth	1% (2011 est.)
GDP per capita	$2,289 (2011 est.)
GDP by sector	agriculture (67.4%) industry (20.4%) services (12.2%) (2011 est.)
Inflation (CPI)	19.6% (2011 est.)
Population below poverty line	57% (2011 est.)
Labour force	13.4 million (2011 est.)
Labour force by occupation	agriculture: 59.2% (2011 est.)
Unemployment	19.72% (2011 est.)
Main industries	tourism, garments, construction, rice milling, fishing, wood and wood products, rubber, cement, gem mining, textiles
Ease of Doing Business Rank	147th[1]
External
Exports	$6.491 billion (2011 est.)
Export goods	clothing, timber, rubber, rice, fish, tobacco, footwear
Main export partners	US 63.32%, Singapore 10.46%, Germany 9.52%, UK 7.07%, Canada 7.01%, Vietnam 3.15% (2011)
Imports	$3.8 billion (2011 est.)
Import goods	petroleum products, cigarettes, gold, construction materials, machinery, motor vehicles, pharmaceutical products
Main import partners	Thailand 24.83%, Vietnam 19.73%, China 14.08%, Singapore 11.34%, Hong Kong 7.41%, Taiwan 5.1%, South Korea 4.06% (2011)
Gross external debt	$13.317 billion (2011 est.)
Public finances
Revenues	$0.984 billion (2011 est.)
Expenses	$15.871 billion (2011 est.)
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)[2]
All values, unless otherwise stated, are in US dollars

Economy of Cambodia

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.

Foreign aid

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 $643 million at the March 1994 ICORC meeting in Tokyo. To date, therefore, the total amount pledged for Cambodia's rehabilitation is approximately 12.3 G$.

[edit] 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.

[edit] 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: 1.8%

Electricity:

• production: .981 billion kWh (2011 est.)
• consumption: .867 billion kWh (2011 est.)
• exports: 0 kWh (2007 est.)
• imports: 274 million kWh (2011 est.)

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)