We start a new year and the eyes of the global markets are expecting best numbers in 2010. The last 18 months were the worst in economy in the world since the 1930s Great Depression. Especially huge economies like US, Japan and Britain suffered the consequences of the sudden crush of several markets around the world duiring the first months of the year. Just the fear to the financial chaos rose the numbers of unemployment, worsened the situation of immigrants, caused cuts in exports and imports and reduced tourism around the globe.
At the same time, the 2009 Recession – as any other critical factor in history – let lessons and experiences that will be definitive for the development of the markets of the 21rst century. If before 2009 Globalization was seen by many as a great system to unite all nations under a common economical process, the Recession gave its own signal that such process should not be done without global rules. Latin America, for example, was the less affected region during the crisis and studying the reasons will give clues to what must be done to avoid future debacles. Undoubtedly, the other interesting economy to be an object of study this year is China that also showed a different behavior facing the crisis. Just to say something, China closed the year with an increase of 8.4 percent in its GDP.
It was only after October that economies like US, Germany and Japan began to show a slow process of recovery thanks to the big investment made by their governments pouring million of dollars in some of the financial institutions. It is possible to say now that the Recession is over, but it is evident that 2010 will be the time of the Recovery and it can be slow.
Brief Description of Cambodian Economy
Before 1999 Cambodia was a stagnant economy due to the difficult decades of wars and conflicts since 1970. International aid, agreements to revitalize its financial growing like the one with the World Trade Organization, and its joining to ASEAN (Association of the South East Nations,) changed it. Between 2001 and 2005 the country got its first financial growing in decades thanks to the opening of garment factories. According to Cia World Factbook, between 2004 and 2008 the economy grew near 10 percent per year stopped only by the global crisis. The leading sectors were mainly garment factories, agriculture, construction and tourism. It is also a dollarized economy along with the use of the Riel currency.
The expiration of agreements in garment and textile in 2005 produced a new change in Cambodia, because it removed the protection of its textile exports. In that case, the lower-priced production of China, India, Vietnam and Bangladesh became a challenge. Garment factories continue today an important motor of development and urbanization with more than 85 percent of the country’s export and more than 300 thousand persons involved in production.
Mining began to develop in 2005 with the exploration of natural gas, bauxite, gold, iron and gems.
The archeological sites of Angkor are the main reason for the attraction of foreign tourism since political stability reigns in the last decade. Investment and international support to protect and promote the temples, put Cambodia in the obliged route of international visitors. But the first wages of tourists, especially coming from their tours in Thailand until 2005, began to discover a country and interested people beyond the temples. The reconstruction of Phnom Penh and the discovery of natural beaches at the south, especially in Sihanoukville and Kep, attracted thousands of foreigners from the five continents in a rate of almost 2 million arrivals – such number was registered by the Ministry of Tourism in 2008. Opportunities for foreign investment and a boom in construction made that many of eventual visitors changed their visas into residents. Of course, the 2009 Recession affected global tourism and foreign investment in developing countries.
The Cambodian developing challenges this year will be the reduction of poverty – 1/3 of its 14,805,000 inhabitants live under poverty,- especially in rural areas. It means that policymakers must think in generate more jobs, to provide the young people with skills, more schools and opportunities for superior education and reaching marginalized communities with basic infrastructures. Of course, 2010 as the year of the Global Recovery, will make it a little difficult and surely the country has to develop a more diversified economy. Such perspective was already contemplated during the Third Cambodia Economic Forum (CEF) of February 5, 2009 in Phnom Penh that focused on Increasing Cambodia’s Competitiveness for Growth and Poverty Reduction in the Face of the Global Financial Crisis. Diversify sources of growth, increase productivity, expand market acces and enhance trade while continue to reduce poverty, were the subjects of reflexion in the moment of the worst time of the 2009 Recession.
According with the World Bank, the Cambodian economy will grow 3 percent this year.
Cambodia Financial Database
|Detail||2008||2009||2010¹||Thai 2009||Thai 2010¹|
|GDP||11.250 m.||10.901 m.||4.3||266.434 m||3.7|
|GDP per capita||823.124||781.906||3,972.987|
|GDP based on PPP||28.461 b.||28.137 b.||536.388 b|
|GDP based on PPP per capita||28.461||28.137||7,998.445|
GDP (Gross Domestic Product); PPP (Purchasing Power Parity); different sources, mainly the International Monetary Fund. Units in American Dollar. Population based on UN population prospect. 1. 2010 prospective economical growing according to IMF.
|Foreign Currency||Khmer RIEL||Riel by bills||American Dollar|
|1 American Dollar||4,212.60||1||0.0002374|
|1 Australian Dollar||3,783.80||1,000||0.24547|
|1 Hong Kong Dollar||543.345||2,000||0.49094|
|1 Singapore Dollar||3,000.28||10,000||2.45471|
|1 Thai Bath||128.501||20,000||4.90942|
|1 Vietnamese Dong||0.23008||50,000||12.27355|
|1 Philippine Peso||91.10294||100,000||24.54711|
|1 Indian Rupee||90.36992||200,000||49.09421|
|1 British Pound||6,808.15||300,000||73.64132|
|1 Japanese Yen||45.29957||1,000,000||245.47|
|1 Chinese Yuan||617.059||10,000,000||490.942|
Data as for the first week of January 2010. Check cambodiainsight.com for daily updates.
Even if you can do any commercial transation in Dollars in Cambodia (double currency Riel/US Dollar)
we recommend you to use Riel for popular transations (public transportation, market, etc) if you want
to keep cents. It is usual that any transation becomes more expensive in US Dollars.
Wait in our next number 2010 economical perspectives in Cambodia.