FACTS ON CAMBODIA'S ECONOMIC DEVELOPMENT

Last year, after two decades of fast-paced growth, Cambodia’s Gross National Income (GNI) reached $1,070 per person, lifting the Kingdom out of Least-Developed Country (LDC) status into the ranks of lower-middle income countries alongside India, Vietnam and the Philippines, among others. 

That rise in income is a reflection of the country’s exceptional GDP growth over the last twenty years, and especially the last decade. The Cambodian economy enjoyed an average growth rate of 7.6% between 1993 and 2003, and 10% between 2004 and 2007. 

In 2014, the World Bank called Cambodia an “Olympian of Growth”, noting that the Kingdom had grown at an average yearly growth rate of 7.7% for two decades, making it the sixth fastest growing country in the world over that time period.

Cambodia’s growth dominated the region’s between 2002 and the crash of 2008. After recovering quickly, it has since maintained a steady rate at around 7%, again higher than most of its neighbours.

Cambodia’s GDP reached $20 billion in 2016. It is projected to broadly maintain this level, increasing to $23 billion by 2020.

In 1985, agriculture accounted for 90% of Cambodia’s economy. By 2015, that had fallen to 29%, while industry’s contribution to GDP had by then increased to 26% primarily on the backs of tourism and the garment industry. Within the scope of indusry, construction also saw a steady rise to 8.8% by 2015. Cambodia is obliged to increase the industrial sector’s share of GDP to 30% by 2025 under its own Industrial Development Policy (IDP) 2015-2025.

Services occupied 39.4% of Cambodia’s GPD in 2015, of which hospitality accounted for 5.36%, and real estate and business grew to 6.26%.

Limited industrial diversification has seen the proportion of exports taken up by the garment and footwear industry fall from 80% in 1998 to 60% in 2015. Value-added agricultural exports also fell slightly from 10% to 8%, but are projected to rise to 12% by 2025 under the IDP.

FOREIGN DIRECT INVESTMENT

Cambodia’s inflation rate had been chaotic in the period up to and immediately after the signing of the Paris Peace Accords, running at 90% in 1989, 150% in 1990, 88% in 1991, and 177% in 1992. One year after signature of the Paris Peace Accords, inflation was still high, at 26%, while GDP was under $3 billion. In 1995, the government succeeded in bringing some buoyancy into the system by opening up the country’s markets and introducing a law on investment. Inflation dropped to 6% in 1995, foreign aid inflows increased and exports from the country’s garment industry started to grow. Foreign direct investment virtually doubled though, like everything else, was soon negatively impacted by the regional economic crisis of 1997 and 1998. In 2007, FDI formally exceeded donor aid. 

POPULATION & POVERTY

Between 1996 and 2016, Cambodia’s population grew from 10.5 million to 15.76 million. An average annual growth rate of 2.5% means that Cambodia’s population is projected to grow to 20 million by 2020. At the same time, it has continued to improve its position on the UNDP Human Development Index (HDI), and the poverty rate continues to fall. 

Figures from the UNDP, put Cambodia’s poverty rate at 53.2% of the population in 2004. Levels started to drop substantially after this, falling to 23.9% by 2009, and 14% this year.

At 14%, the poverty rate is currently closer to that of Indonesia (10.9%), Thailand (10.5%), Vietnam (7%) and Malaysia (0.6%). It is substantially lower than that of Cambodia’s other neighbours, Laos (23.2%) and Myanmar (25.6%).

The economy is growing significantly faster than the population overall, pulling away substantially since 2009.

Sources : World Bank, UNDP, CDC,