Country Report Cambodia February 2010

Outlook for 2010-11: Economic growth

Gross domestic product by expenditure
(CR bn at constant 2000 prices where series are indicated; otherwise % change year on year)
 2008a2009a2010b2011b
Private consumption22,452.622,228.123,006.124,087.4
 7.1-1.03.54.7
Public consumption1,536.11,824.61,914.21,994.2
 0.018.84.94.2
Gross fixed investment6,938.26,277.36,438.87,008.9
 20.5-9.52.68.9
Final domestic demand30,926.930,330.131,359.133,090.4
 9.4-1.93.45.5
Stockbuilding194.0293.9314.0267.3
 -1.0c0.4c0.1c-0.2c
Total domestic demand31,120.930,624.031,673.133,357.8
 8.4-1.63.45.3
Exports of goods & services20,857.018,344.219,690.120,692.5
 3.6-12.07.35.1
Imports of goods & services23,930.821,406.623,030.724,145.6
 5.6-10.57.64.8
Foreign balance-3,073.8-3,062.4-3,340.6-3,453.1
 -2.0c0.0c-1.0c-0.4c
GDP28,211.027,787.828,690.930,154.1
 5.0-1.53.35.1
a Economist Intelligence Unit estimates. b Economist Intelligence Unit forecasts. c Contribution to real GDP growth (as a percentage of real GDP in previous year).

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We estimate that Cambodia's economy contracted by 1.5% in 2009-its worst performance since records began in the mid-1990s-as the global recession undermined the main drivers of growth. There will be no resumption of pre-crisis rates of economic expansion in the forecast period, with real GDP expanding by 3.3% in 2010 and 5.1% in 2011. The garment sector is particularly heavily exposed to the slowdown in the US, which is Cambodia's main export market, accounting for more than 50% of its export earnings. Construction activity slowed in 2009 as the mainly South Korean companies that have financed a series of high-profile property developments scaled down work amid a global shortage of credit. As global economic growth recovers from 2010 onwards, construction activity will pick up. Similarly, Cambodia's tourism sector, a major source of economic growth in recent years, will attract more visitors in 2010-11 than it did in the depressed conditions that prevailed in 2009. Assuming that weather conditions are favourable, the agricultural sector will record steady growth owing to improvements in productivity, as foreign investors will lease large areas of land for plantations.

Private consumption will begin to recover in 2010-11, thanks to the fact that personal disposable income will edge upwards as agricultural commodities sell for higher prices and garment factories begin to hire again. However, annual growth in private consumption will average only 4.1% in the forecast period, compared with over 8% in 2005-08. After contracting sharply in 2009 owing to a fall in foreign direct investment (FDI) amid tight global credit conditions, fixed investment will begin to expand again in 2010. However, fixed investment (at constant prices) will not return to its 2008 level until 2011. The external sector will exert a drag on growth in 2010-11.

© 2010 The Economist lntelligence Unit Ltd. All rights reserved
Whilst every effort has been taken to verify the accuracy of this information, The Economist lntelligence Unit Ltd. cannot accept any responsibility or liability for reliance by any person on this information
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