The merchandise trade deficit will remain substantial in the forecast period, owing to Cambodia's reliance on imported capital goods. Even after economic growth recovers in the US, Cambodia's leading export market until 2009, garment manufacturers will struggle to compete with more efficient producers. Although export growth will accelerate in volume terms in 2011-12, a deterioration in the terms of trade means that growth in the value of exports will slow in 2012. The services surplus will grow in the forecast period as tourism recovers, following a drop in the number of high-spending visitors to the country in 2009. However, there will be an increase in demand for imported trade-related services, such as insurance and freight. The income deficit will narrow during the forecast period, owing to increased returns on Cambodia's holdings of foreign reserves. After expanding to an estimated 8.5% of GDP in 2010, we expect the current-account deficit to narrow to 6.7% in 2011, before widening to 7.7% of GDP in 2012.