New Cambodia Economic Watch predicts slow economic recovery

I've got to get my hands on this data! It would come in handy for the current research I am doing on youth employment issues in Cambodia.

By Sam Campbell
Economics Today

Economics Today's new Cambodia Economic Watch hits the newsstand this week, offering the most comprehensive analysis of the past year's economic and business trends of any Cambodian institution, as well as informed predictions about the years to come. The full color graphs and clear explanations that made the publication both accessible and uniquely informative.

A collaborative effort between the Economic Institute of Cambodia (EIC) and Economics Today, the Cambodia Economic Watch offers readers an unmatched analysis of Cambodia's economy.

Report Highlights

By Economic Institute of Cambodia
Edited by Economics Today

After years of galloping growth, 2009 has been a very tough year for Cambodia. The global economic crisis of 2008 and the ensuing downturn continue to impact several of Cambodia's primary economic growth engines. Cambodia experienced its first negative growth since the early 1990s, with a GDP contraction of 1 percent.

It is expected Cambodia will recover in 2010, posting growth of about 3 percent in line with the recovery of other countries. However, this figure has been downgraded from the 4 percent growth expected earlier in the year, a result of the more-serious-than-expected fallout from the global downturn. 2010 could be a difficult year for Cambodia.

Cambodia's main economic growth-supporting industries over the last decade—garments, construction and tourism, all of which are exposed to international markets—contracted sharply or saw feeble growth in 2009.

Industry suffered the biggest contraction, down 8.5 percent in 2009. The reign of Cambodia's garment industry as the driver of the economy could be over, as the sector contracted by a massive 14.7 percent. The industrial sector as a whole is projected to grow just 1.5 percent in 2010, and the garment sector predicted to grow even less, at 0.6 percent. A declining market share in the most valuable markets, especially the US, suggests Cambodia is less competitive than other producers such as Bangladesh.

Real estate prices—which have increased rapidly in recent years—tumbled by as much as 40 percent in 2009, with a knock-on effect for residential real estate and construction activities: these are now in decline. There are few signs of a recovery in real estate, so prices are likely to remain stagnant or decline further in 2010. There are some signs of nonperforming loans linked to the decline in the sector, though data are not comprehensive.

Services have also suffered in the wake of the downturn, posting only 1.2 percent growth in 2009, down from 9 percent the year before.

Tourism still showed growth in 2009, but only 0.6 percent, a large fall from the 9.8 percent growth seen in 2008. Air tourist arrivals fell sharply in 2009. While there was growth in arrivals by land and by water, these visitors tend to spend less than tourists arriving by air. The total number of foreign visitors to Cambodia did continue to increase up to October 2009, but the increase, just 0.3 percent, was tiny compared to previous years.

The agricultural sector was the main bright spot in the Cambodian economy, showing 3.5 percent growth on the back of good weather and strong international demand. Farming, the primary occupation for the majority of Cambodians, has acted as a sponge for laid-off workers in other sectors, though underemployment in the sector is high. The agricultural sector is still natural resource-based and depends largely on rainfall, meaning growth prospects are modest, with a predicted 4 percent growth for the sector in 2010. The growth in paddy has remained stable compared to other commodities, posting 3.6 percent growth in 2008, a predicted 3.4 percent growth in 2009 and a predicted 3.7 percent growth in 2010.

The financial sector seems to be stable despite increasing nonperforming loans, mostly related to real estate speculation, though available data is far from comprehensive.

In short, Cambodia's economy has in 2009 been pulled down by a sharp decline in the industry sector that solid positive growth in agriculture and anemic growth in services could not offset. This contraction is in stark contrast to the brisk 6.7 percent positive growth seen in 2008.

In short, Cambodia is more exposed to the economies most affected by the GEC—such as the US and South Korea—than other regional economies that have remained in the black in 2009.

Cambodia's Garment Workers Hit by Recession

I read this on KI Media. After a period of true growth, it's always the poorest who are most affected when jobs are eliminated.

By Ker Yann, VOA Khmer
10 November 2009

Over the last decade economic growth has helped lift Cambodia out of its poverty. The signs were everywhere; bustling construction sites around Phnom Penh ; young workers filing into factories, filling orders for eager clients abroad.

More than 400,000 jobs in the textile industry fuelled the hopes of many young women whose earnings in the city helped support their extended families in the countryside.

Ny Sopheak: "I worked in the packing section of a textile factory. I earned sometimes $60 a month from the factory work and I sent $10 a month to my father."

But that factory, like dozens of others, has now closed. The global recession scared investors and shut down factories.

Twenty-three-year-old Ny Sopheak, like 50,000 other Cambodians, recently lost her job in the garment industry.

This in a country where not having a job can mean not eating, or perhaps just having one meal a day.

Ny Sopheak: "Since I don't have enough food I feel so weak and I often get sick."

Today Ny is sharing one egg and some rice with her roommate, Horn Devy who also lost her factory job. That's one egg between two people. Horn feels she can't go on much longer.

Horn Devy: "It's very difficult. It's a hard life, living in a small room like this."

Horn is only 15 years old. She was sent to work to help out her family, small time farmers and basket weavers who can't make ends meet.

Horn's mother says she worries about her, so young, and away from the family. Even so, she wanted Horn to earn money, so that her brothers can finish school.

But having lost her job, Horn has gone from providing for her family to becoming an extra burden. Asked how she feels about this, she says,

Horn Devy: "It's hard to say. I am starving. When you have no food it's very difficult to feel anything."

Her story is unusual because of her young age, but all over Cambodia's capital there are women who are falling into abject poverty as they lose their jobs in the textile factories.

Meanwhile, thousands of factory workers have turned to the streets to pressure the government to guarantee their jobs, their incomes, and their access to food.

And while Cambodia has been hard-hit, other countries are worried too. Guaranteeing the availability of food for everyone is now an urgent issue for governments across Asia-Pacific.

Many governments are now looking at how to invest in agriculture, to stem tide of migration towards the cities, and to help make food more affordable.


But textile factories too, are needed. If they keep closing, experts worry that much of the progress achieved in places like Cambodia, in education, in economic development, and in human rights, could be at risk; and with it the future of the entire generation.

(italics are mine because this is the real kicker)