Trade and tourism in Cambodia slowed in the first half of 2014. Shipments of garments and footwear rose by 14.5% to $2.8 billion, compared with a 17.0% gain a year earlier, and growth in total merchandise exports moderated to 20.0% from 27.0% in the first half of 2013. Imports also decelerated, to 6.7% from 24.7%.
|Selected Economic Indicators (%) - Cambodia||2014||2015|
|ADO 2014||Update||ADO 2014||Update|
|Current Account Balance (share of GDP)||-11.3||-11.3||-10.9||-10.9|
Source: ADB estimates.
Tourism grew at a more gradual pace, largely because tourist arrivals to neighboring Thailand declined. Tourist arrivals to Cambodia rose by 5.2% to 2.2 million in the first half of 2014, against a 19.1% rise in the year-earlier period. Other available data show that growth in credit to the private sector was 12.0% year on year in June 2014, well below the expansion rate of a year earlier.
Political tensions that followed last year’s Cambodian national elections have abated in recent months, and labor unrest in the garment industry eased after the minimum monthly wage for garment workers was raised in February this year. These developments are expected to lift investor confidence. This Update retains the Asian Development Outlook (ADO) 2014 forecast that gross domestic product (GDP) growth will ease to 7.0% this year before picking up in 2015.
Inflation increased to 4.9% in June 2014 and averaged 4.4% in the first 6 months, driven mainly by higher food prices. A tightening of customs duty collections late in 2013 put some upward pressure on prices for imports. Inflation is now projected to be higher than previously expected. Current account forecasts are retained from April. Gross official reserves at midyear were $3.9 billion, cover for 3.8 months of imports of goods and services.
Source: ADB. 2014. Asian Development Outlook 2014 Update. Manila.