The Asian Development Outlook 2011 emphasizes two important challenges that developing Asia must resolve to sustain the inclusive growth that is needed to eliminate poverty in the region. The immediate problem is tackling rising consumer price pressures. Inflation's insidious effects call for preemptive action to contain it before it begins to accelerate. The poor are the most vulnerable, particularly from rising food prices.
Cambodia: Based on a rebound in tourism and clothing exports, recovery in 2010 was also supported by a good year in agriculture. However there are indications that poverty has increased in recent years. The pace of growth is expected to pick up in the forecast period. Inflation will also rise. A new effort to promote rice production and exports goes some way to addressing the need to diversify sources of growth and reduce rural poverty.
Economic performance
A bounceback in tourism and clothing exports, coupled with increased production of paddy rice, drove a 6.3% recovery in GDP last year from a sharp slowdown in 2009 caused by the global economic crisis.
The primary sector, producing about a third of GDP, grew by an estimated 4.2% in 2010. Paddy rice output rose by about 5% to 7.9 million tons, mainly a result of favorable weather and better access by farmers to fertilizers and higher quality seeds. Livestock production increased by about 5.5%, whereas forestry and logging and fisheries output registered only slight growth.
Recovery in global travel saw tourist arrivals rise by about 16% to 2.5 million, and tourism receipts by 14.5% to $1.78 billion. The sharpest gains were in arrivals from Asia, including Viet Nam (up 48% to 466,700), the Republic of Korea (up 47% to 289,700), and the People’s Republic of China (PRC—up 39% to 177,700). This rebound in tourism contributed to estimated growth of 4.3% for services.
Industry was the main contributor to GDP growth in 2010, expanding by an estimated 11.6% (it had contracted in 2009). External demand for Cambodian garments, principally from the United States (US) and the European Union (EU), rebounded. Data from the US Department of Commerce showed that US garment imports from Cambodia rose by 19% in US dollar terms in 2010. Construction activity remained sluggish, reflecting a fall in foreign investment in property during the global crisis and slow pickup in residential building.
Increased deposits of foreign currency at banks drove a 20.0% year-on-year increase in M2 money supply in December 2010. Bank lending to the private sector picked up from 6.5% year on year at end-2009 to 27% 12 months later, reflecting the economic recovery. The riel appreciated by 2.4% against the US dollar over 2010.
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