Cambodia follows an open market system having abandoned the planned economy in 1995. After the change the country’s gross domestic product (GDP) improved from low levels of approximately $3billion to $13 billion. Tourism and textile manufacturing industries are the mainstay of the country’s economy. The country also has vibrant service-oriented industries especially in catering and trading related activities. The country’s economy has also been slowed down by political infighting and regional unrests especially around 1998. Recently, the country announced the discovery of oil and natural gas reserves that are expected to add value to its economy.
Overview Of The Economy Of Cambodia
Cambodia had a GDP valued at $16.8 billion in 2015 and the purchasing power parity was $36.6 billion in the same period. It has experienced consistent economic growth every year since 2011. It slightly decelerated to 6.9% in 2016 from the 7% experienced in the previous year. The textile industry plays a significant role accounting for over 80% of the exports and employing hundreds of thousands of citizens most of whom are females. Agriculture has remained a major contributor to the country’s economy mainly through rice which is the staple crop. The unemployment rate is at 3.5% with the inflation being 4.1%. The percentage of its population below the poverty line is 18.6%.
Leading Industries Of Cambodia
The country has highly developed textile and agricultural industries. It mainly deals with the final stages of turning yarns and fabrics into the final garment. The industry is strong experiencing constant growth. For example in 2012, it grew by over 8% increasing the income by over $4 billion. Agriculture is also important to the country. Some of the main crops produced besides rice are corn and cassava. They are responsible for feeding the nation.
Top Export Goods And Export Partners Of Cambodia
The country exports timber products, textile, and agricultural products among others to the US, the UK, Germany, and China. The US accounts for over 30%, the UK 10%, Germany 8%, and China is 7% of the total exports from the country. The overall value of the exports was $8.4 billion in 2012.
Top Import Goods And Import Partners Of Cambodia
Thailand, China, and Vietnam are the leading countries from which it obtains commodities accounting for 27%, 21%, and 20% respectively. It mainly purchases petroleum products, machinery, motor vehicle and pharmaceuticals. The total value of its imports was $8.8 billion in 2012.
Challenges To The Economy Of Cambodia
The country has a low level of education which has directly affected the quality of its human capital. The country lacks experts who can run significant sectors of the economy. They are only employed in manufacturing industries with low-paying jobs.
The government has launched plans to diversify its economy so that it no longer depends on the primary products. After several years of conflict and economic stagnation perpetuated by wrong economic policies such as planned economy, Cambodia has experienced strong growth over the past decades. It has attracted foreign direct investment especially due to the availability of cheap labor. It has also had its economic growth increasing significantly due to favorable relations with neighboring countries like Thailand and Vietnam. Membership to the regional economic blocs such as the ASEAN as well as the World Trade Organization (WTO) has assisted the country in attracting foreign direct investment.