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World > Asia > Cambodia > Economy (Notes)

Cambodia - Economy (Notes)


ECONOMY
Since 2004, the economy?s growth rate has averaged over 10%, with the garment sector and the growing tourism industry driving the growth. Inflation steadily increased from 1.3% in 2003 to 6.7% in 2005; for 2006, it was 5%. The economy is heavily dollarized; the dollar and riel can be used interchangeably. Cambodia remains heavily reliant on foreign assistance--about half of the central government budget depends on donor assistance. Cambodia has had trouble attracting foreign direct investment (FDI), due in part to the unreliable legal environment. FDI was recorded at $142 million in 2000 and gradually dropped to $121 million in 2004. In 2005, for the first time in five years, FDI increased to $216 million.

Manufacturing output is concentrated in the garment sector, which started to expand rapidly in the mid-1990s and now employs more than 250,000 workers. Garments dominate Cambodia?s exports, especially to the U.S., and accounted for over $2 billion in revenues in 2005, a record high. Since the end of the Multi-Fiber Arrangement in 2005, Cambodia has maintained exports, against expectations. The other main foreign currency earner is tourism; in 2004, visitors topped one million for the first time, many of whom visited the ancient Angkor Wat complex at Siem Reap. The service sector is heavily concentrated in trading activities and catering-related services. Exploratory drilling for oil and natural gas began in 2005 and although there are no clear figures, oil production could more than double Cambodia's revenue.

In spite of recent progress, the Cambodian economy continues to suffer from the legacy of decades of war and internal strife. Per capita income and education levels are lower than in most neighboring countries. Infrastructure remains inadequate. Most rural households depend on agriculture and its related subsectors. Corruption and lack of legal protections for investors continue to hamper economic opportunity and competitiveness. The economy also has a poor track record in creating jobs in the formal sector, and the challenge will only become more daunting in the future since 50% of the population is under 20 years of age and large numbers of job seekers will begin to enter the work force each year over the next 10 years.


Facts at a Glance: Geography - People - Government - Economy - Communications - Transportation - Military - Climate - Current Time - Ranking Positions
Notes and Commentary: People - Economy - Government and Political Conditions - Historical Highlights - Foreign Relations - Relations with U.S.



Facts at a Glance
Geography
People
Government
Economy
Communications
Transportation
Military
Climate
Current Time
Ranking Positions


Notes and Commentary
People
Economy
Government and Political Conditions
Historical Highlights
Foreign Relations
Relations with U.S.





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