As the Government of Cambodia continues to build on strong growth and address emerging challenges, this publication examines the opportunities and the challenges, and offers recommendations for long-term socioeconomic strategy.
During the last 2 decades, Cambodia achieved remarkable economic growth and development—its gross domestic product (GDP) has expanded at an average 7.6% a year since 1995. The country seized growth opportunities from its rich natural resources and the evolving dynamics of the regional and global economy.
It effectively leveraged its land and water resources to steadily boost agricultural production, particularly rice, making Cambodia the world’s eighth-largest rice producer. Cambodia is also Asia’s 10th largest garment exporter, a position it was able to reach by taking advantage of a global quota regime and the search by garment producers for new low-cost production sites. In addition, Cambodia’s unique cultural heritage has helped it make its mark as a tourism destination in Southeast Asia.
Rapid economic expansion brought important gains in national income and poverty reduction. Even so, Cambodia remains one of Asia’s eight low-income countries and the second-poorest country in Southeast Asia. Yet Cambodia faces considerable challenges. It suffers from major infrastructure deficits; limited skills development and education quality; and weaknesses in governance.
Fiscal resources are also stretched. To sustain its strong economic performance, several growth-supporting factors must be strengthened—infrastructure remains inadequate and unreliable, education attainment and skills are subpar, governance is weak, and savings rates are still low.
Moreover, for a successful transition to a modern industrialized economy, Cambodia needs to diversify and upgrade its productive capabilities.
Excerpted from: ADB