The Cambodian Central Bank said economic growth remains robust so far this year and forecast that gross domestic product will expand by 7.1 percent in 2019.
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In its latest biannual report, the National Bank of Cambodia said economic growth this year will be supported by the strong performance of exports as well as the construction, real estate, and tourism sectors. By contrast, agriculture will experience a slowdown.
In the first half of the year, industry grew by 10.5 percent, while services expanded by 6.6 percent. Agriculture, however, grew by just 1.4 percent, NBC said, noting that the sector’s contribution to GDP decreased to just 17 percent.
The industrial sector’s share of GDP rose to 36.4 percent, while services contributed 39 percent.
The value of the country’s imports and exports combined reached $17.3 billion in the first six months of the year, NBC noted in the report.
Exports were valued at $6.8 billion (48.8 percent of GDP) while imports reached $10.5 billion (73.6 percent of GDP).
Exports expanded by 13 percent in the first half of 2019, compared to 16 percent in the first half of 2018. Cambodia mostly exported travel goods and other textile products, garment and footwear, bicycles, and rice, according to the report.
Cambodia’s major export destinations were the European Union (33.2 percent of all exports), the United States (28 percent), and Japan (7.7 percent).
Cambodia imported mostly from China (46 percent of all imports), Thailand (15.6 percent), Vietnam (13.2 percent), and Japan (4.5 percent), NBC said.
In the report, NBC’s director-general Chea Serey said that economic growth remains strong, buttressed by growth in the garment and footwear sector, construction and tourism.
Ms Serey noted that the inflation rate was 1.9 percent in the first half of this year compared to 2.5 percent in the second half of 2018.
She said that the exchange rate is at 4,038 riels to the dollar. International reserves have reached $11.1 billion, equal to five months of imports and services, she noted.
However, Ms Serey said the Cambodian economy is facing several external challenges, including increasing competition abroad and the slowdown of the Chinese economy.
Ms Serey said Cambodia’s preferential trade status with the European Union and the United States could be lost in the near future as the country becomes an upper-middle income economy. She said the government must strive to enter free trade agreements with countries in the region to sustain current economic growth.
“If the Everything-but-arms agreement is revoked, tariffs will increase for many products, especially garments. Currently, Cambodia doesn’t pay tariffs but it could pay up to 12 percent after the EBA is revoked,” Ms Serey said.
“If Cambodia doesn’t manage to diversify its markets and its production, there will be a slowdown in exports,” she added.