ECONOMY
Since 2004, the economy’s growth rate has averaged over 10%, with the garment sector and the growing tourism industry driving the growth. Inflation has remained relatively steady and at low levels, not rising above 6 percent since 1998. 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, which started to expand rapidly in the mid-1990s and now employs more than 350,000 workers. Garments dominate Cambodia’s exports, especially to the U.S. Despite predictions that Cambodia’s garment sector would contract following the expiration of the Multifiber Agreement in 2005, the sector has actually expanded by nearly 20 percent to an estimated $2.6 billion in 2007. The other main foreign currency earner is tourism. The number of tourists coming to Cambodia is increasing by 20 – 25 percent per year, with two million visitors estimated to have visited Cambodia in 2007. 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. In spite of recent progress, the Cambodian economy continues to suffer from the legacy of decades of war and internal strife. Per capita income and education levels are lower than in most neighboring countries. Infrastructure remains inadequate, although road networks are improving rapidly. Most rural households depend on agriculture and its related subsectors. Corruption and lack of legal protections for investors continue to hamper economic opportunity and competitiveness. The economy also has a poor track record in creating jobs in the formal sector, and the challenge will only become more daunting in the future since 50% of the population is under 20 years of age and large numbers of job seekers will begin to enter the work force each year over the next 10 years.
GDP (2007 est.): $8.3 billion.
Per capita GDP (2007 est.): $571.
Annual growth rate (2007 est.): 9.05%.
Inflation (2007 est.): 6.2%.
Natural resources: Timber, gemstones, some iron ore, manganese and phosphate, hydroelectric potential from the Mekong River.
Agriculture (31% of GDP, 2007 est.): 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 (26% of GDP, 2007 est.): 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 (43% of GDP, 2007 est.): 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 est, )--garments, shoes, cigarettes, natural rubber, rice, pepper, wood, fish. Major partners--United States, Germany, U.K., Singapore, Japan, Vietnam. Imports ($5.3 billion, 2007 est.)--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 percent 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.
Exchange rate (2007): 4,006 riel per U.S. $1.
