1. Gross Domestic Product

Cambodian economy maintained high growth of more than 10% p.a. for four consecutive years between 2004 and 2007. While GDP growth dropped to 0.1% in 2009, having suffered from world economic recession started in the latter half of 2008, GDP growth rate in 2010 recovered up to 6.0%. According to the MEF’s forecast, the growth rates are estimated to persist between 6.0% and 6.5% in 2011 and 2012 (below figure).

Source: Ministry of Economy and Finance (MEF), Cambodia

Trend of GDP Annual Growth

GDP amount has been steadily grown with 43,057 billion Riels in 2009 and 47,048 billion Riels in 2010 and is projected to be 52,141 billion Riel in 2011 (approximately USD 12.9 billion) and 57, 363 billion Riel in 2012 (approximately USD 14.2 billion).

Per capita GDP has also steadily increased since 1998 when the Riel greatly depreciated against the dollar. Per capita GDP in 2010 reached USD 830, an increase of approximately 70% from 487 US dollars in 2005. It is projected to reach USD 904 in 2011 and USD 984 in 2012 respectively, according to the MEF’s forecast. (below figure)

Source: Ministry of Economy and Finance (MEF), Cambodia

GDP Per Capita

2. Gross composition

The composition of GDP by industrial sectors is as shown in Figure II-1-3. One of the characteristics of changes took place in between 2006 and 2011 is that the ratio of industry dropped from 26% to 22%, while the ratio of Agriculture, Forestry and Fisheries increased from 30% to 32%.

As for “Agriculture”, the crops’ gross value added (GVA) dropped to 3.7% in 2011, although it grew at the highest record of 27.6% in 2005. “Livestock & Poultry” recorded the growth of 5% or more in 2009 and 2010 but growth ratio became lower in 2011. The growth ratio of “Fisheries” and “Forestry & Logging” sharply dropped in 2010, but recovered in 2011 to 3.8% and 1.1% respectively.

Among “Industry”, the “Textile, Apparel & Footwear” and “Construction”, which occupied 76% share in 2007, have been the major players for fast growth of the sector. These subsectors, however, were seriously suffered from the financial crisis of 2008. Industry’s growth decreased to 4.0% in 2008 and -9.5% in 2009 but it recovered to 13.6% in 2010. According to MEF’s forecast, the growth rate of “Industry” will be remained at 8% to 9% in next few years.

“Services” occupied 38% share in GDP in 2011 with heavy dependency on the “Trade” and “Transport & Communication”. “Hotel & Restaurant” which have been benefited from tourism and infrastructure development remained high growth ratio constantly until 2011, except for 2009. While the growth rates of “Real Estate and Business” were sharply dropped to -2.5% in 2009 and -15.8% in 2010 due to world economic crisis of 2008, the rate recovered to 5.1% in 2011.

Note: Figures of 2011 are the estimated value.

Source: Ministry of Economic and Finance, Cambodia

Composition of GDP by Economic Activity

GDP Growth Rate by Economic Activity, 2005-2011

Note: Figures of 2011 are the estimated value.

Source: Ministry of Economic and Finance, Cambodia

Breakdown of Industry in GDP, 2005-2011 (Unit: Billion Riel)

Note: Figures of 2011 are the estimated value.

Source: Ministry of Economic and Finance, Cambodia

The comparison of industrial structure with other Southeast Asian nations, as shown in below table, indicates that Cambodia is still at the initial stage of industrialization together with Laos and Myanmar.

Table II-1-3 Composition of GDP of Selected Southeast Asian Countries in 2010, Unit: (%)

Source: Asian Development Bank (ADB), Key Indicators 2011

3. Gross Domestic Expenditures (GDE)

The following figure presents the composition of gross domestic expenditures (GDE) by component for the last ten years (2002-2011). In Cambodia, the private final consumption is the largest component of demand occupying around 80% of GDE. Although the gross fixed capital formation regularly continued to be equivalent to nearly 20% of GDE, it decreased its share to 16% in 2010 and 2011 (estimate).

Cambodian economy heavily depends on exports and imports. The exports and imports were equivalent to around 60% and 70% of GDE respectively in the first half of the 2000s. Although the size of imports to GDE has tended to decrease since 2006, the imports are still equivalent to 62% of GDE. Since the imports usually exceed the exports, net exports (exports minus imports) have continued to have a deficit.

Note: Figures of 2011 are the estimated values.

Source: Ministry of Economy and Finance (MEF), Cambodia

Composition of Gross Domestic Expenditures

(Exports and Imports are shown in the form of Net Exports)

Note: Figures of 2011 are the estimated values.

Source: Ministry of Economy and Finance (MEF), Cambodia

Composition of Gross Domestic Expenditures

(Exports and Imports Are Separately Shown)

The major driving force of Cambodia’s economic growth is the private final consumption. At the same time, the gross capital formation also made a significant contribution to the growth during the period from 2002 until 2009. The contribution of net exports is often negative because of negative trade balance.

Source: Ministry of Economy and Finance (MEF), Cambodia

Contribution of Components to Changes in Gross Domestic Expenditures at 2000 Market Prices

4. GNI per capita

According to ADB’s data, Cambodia’s GNI per capita from 2002 to 2008 had increased by 55 US dollars on annual average and reached 650 US dollars in 2009. Although the figure of Cambodia is still among the lowest in the region (below figure), people with the purchasing power to buy high-end products are now found in Phnom Penh City. Although for investors the Cambodian market seems to be limited, they can enjoy the ASEAN integrated market once the ten ASEAN member countries reduce all import tariffs, which is scheduled for implementation by 2015.

Source: Asian Development Bank (ADB), Key Indicators 2011

GNI Per Capita of ASEAN

Consumer Price Index (CPI)

As shown in below figure, although the inflation rate jumped up to 14.0% in 2007 and 12.5% in 2008, it dropped to 5.3% in 2009 and 3.1% in 2010. The government claimed that the sudden increase of CPI in 2007 was mostly due to a drastic change in composition of commodity basket for weighing the inflation. In addition, the Government also claimed the sharp hike of foods prices at the rates of 19.6% in 2007 and 19.1% in 2008, which were drawn by the escalation in the price of petroleum products on the world market, which contributed to the rise in transportation costs. “Housing”, which increased by 12.7% in 2007, has been showing modest growth and “Health Care”, which showed increase of 4-5% between 2007 and 2009, decreased its increasing rate to 0.7% in 2010.

Source: National Bank of Cambodia

CPI Year on Year Change

Below figure shows the inflation rate for all items from 2008 to September 2011. After reaching the highest level at 35.6% in May 2008, the inflation rate turned to decrease and started the deflation from March 2009 finally reaching the lowest level at -5.7 % in May 2009. After turning to the inflation in November 2009, the inflation rate gradually increased and reached to 7.3 % in February 2010. While the inflation rate tended slightly to decrease through 2010, it started to increase again in the first half of 2011 up to around 7%. However, it can be said that the inflation rate remained steadily in 2010 and 2011 comparing to the sudden and sharp fluctuations occurred in 2008 and 2009.

Source: National Institute of Statistics

CPI All Items from 2008 to 2011(Index: 2006-100)