G-49K1P98ZGC Discover Cambodia : Economy

Discover Cambodia : Economy






1. Gross Domestic Product

Real GDP growth achieved a 4-year high of 7.8% in 2018 (vs 7.0% in 2017)


Cambodia's GDP is primarily driven by:

A. Rapid expansion of exports

  • Export demand derives from the United States and European Union markets

  • Garment and footwear exports account for more than two-thirds of total merchandise exports, at 17.6% of total GDP in 2018, up from 8.3% in 2017


B. Robust domestic demand

  • The demand has led to a surge in imports, which reflects rising consumer confidence

  • Motor vehicles and steel imports, the indicators of domestic consumption and construction demand, rose by 50% and 48% respectively from 2017 to 2018

  • The construction boom was concreted in the capital city of Phnom Penh and more recently in the seaside town of Sihanoukville.




2. Foreign Direct Investment (FDI)

FDI has reached more than US$3.0 billion or 13.4% of GDP in 2018

  • Foreign investment from China has surged, mainly directed towards physical infrastructure projects (e.g. Infrastructure, commercial and residential real estate)

  • This has helped to sustain vibrant construction activity




Figure 1: Rising foreign investment



3. Foreign Relations (Trade)

Cambodia has well-established diplomatic ties with many countries, including China, the United States, Japan, France and the United Kingdom


China

  • Trade between Cambodia and China was USD$5.8 billion in 2017, up 22.0% from 2016.

  • In 2019, the two countries agreed to aim to lift the value of their bilateral trade to USD$10 billion by 2023


United States of America

  • The U.S. imported goods worth USD$3.1 billion from Cambodia in 2017, up 9.0% (USD$252 million) from 2016.

  • Major import goods included knit apparel (USD$1.6 billion), woven apparel (USD$562 million), footwear (USD$271 million), leather products (USD$186 million), and plastics (USD$106 million).



4. Four Key Industries - Garments and Footwear, Tourism, Agriculture and Construction


A. Garment and Footwear

A 74.0% share in Cambodia’s merchandise exports in 2018. The success of the textile industry due to the low cost of labour as compared to Vietnam and China, and abundant natural resources.


B. Construction

The total investment of USD$9.35 billion in 2019, up 79.0% from USD$5.22 billion dollars in 2018.   China, South Korea and Japan are the biggest investors in Cambodia's construction and real estate sector.


C. Tourism

China represents the biggest number of tourist visitors. It is predicted the total number of foreign tourists will hit 7 million in 2020.


D. Agriculture

Contributes to 22.0% of Cambodia's GDP in 2018. Has been growing at a slower rate compared to industrial and service sectors.



5. Employment


Job creation in the Services sector the primary contributor to employment

  • In 2016, the agriculture sector shed 344,000 jobs despite an improvement in performance.

  • Almost half a million jobs were created by the services sector, resulting in net job creation of approximately 250,000.

  • On average, Cambodia adds 164,000 persons to its labour force annually. The growing working-age population have reached 10.1 million in 2015


Figure 2: Contribution to job creation ('000 jobs)




6. Labour

Labour in Cambodia is cheaper than most regional competitors, except Laos and Myanmar.

  • Competitive labour force compared to its neighbouring countries

  • In 2017, Cambodia’s monthly minimum wage of workers in its garment industry increased to US$153, a double of the 2012 level.

  • Yet, the country’s monthly minimum wage remains the most competitive when compared to Thailand (US$250) or Vietnam (US$166).