Driven by garment and improved agricultural export markets, Cambodia has bucked the wider trend of slowing Southeast Asian economies, according to the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
ESCAP’s semi-annual Economic and Social Survey of Asia and the Pacific, published Wednesday, puts Southeast Asia’s annual growth at 4.6 per cent, continuing a three-year consecutvive, below 6 per cent trend for the region.
But despite significant infrastructure and human capital difficulties, Cambodia’s economy continues to show year-on-year above average growth and is on track to record 7.2 per cent growth in 2014, slightly down from 7.6 in 2013, the UN organization’s study says. The Kingdom’s inflation rate remained stable at 2.9 per cent in 2013.
“The least developed countries in the subregion, namely Cambodia, the Lao People’s Democratic Republic, Myanmar and Timor-Leste, maintained high growth rates, underpinned in part by steady inflows of foreign investment, especially in the resource sector,” the study reads.
The study adds that while China, India, Indonesia and Malaysia sustained or even increased the income gap between the richest 20 per cent and the poorest 20 per cent of their countries, Cambodia, fuelled by an increasing labour force, was one of the few that saw a decrease in income inequality.
But the UN-backed study also pointed out that Cambodia, along with its fellow least developed neighbouring countries, continues to lag behind the rest of the world with regards to integrating into global supply chains.
This in turn, “limits their ability to diversify their economies and engage in higher value-added activities,” the study says.
And in the garment sector, which accounts for 80 per cent of the Kingdom’s total export market, there is still room for improvement.
“The minimum wage in the (Cambodia’s) garment industry, which employs about 600,000 workers, was raised; yet, working conditions still need to be improved,” the report says.