The merchandise trade between Cambodia and the US reached $1.169 billion in the first two months of 2023, marking a 20.37 per cent year-on-year drop, with exports to the North American market accounting for a 96.66 per cent share, up 0.18 percentage points on a yearly basis, according to provisional Customs (GDCE) data.
Local manufacturers and exporters have reported material reductions in US orders for Cambodian goods since at least the second half of 2022, especially of textile-related items, amid heightened risks of a significant downturn in the world’s largest economy that could reverberate globally.
In the January-February period, Cambodian imports from and exports to the US were to the tune of $39.056 million and $1.130 billion, respectively, down 24.45 per cent and 20.22 per cent year-on-year, narrowing the Kingdom’s trade surplus with its top export destination by 20.06 per cent on a yearly basis to $1.091 billion.
The world’s largest economy was Cambodia’s number-two trading partner – following mainland China at $1.705 billion – constituting a 17.07 per cent share of the Kingdom’s total international merchandise trade for the two-month period.
The US encompassed 1.10 per cent and 34.39 per cent of Cambodia’s imports and exports, and was the Kingdom’s 10th largest import source, after mainland China ($1.507 billion), Vietnam ($593.557 million), Thailand ($452.411 million), Indonesia ($180.055 million), Singapore ($118.241 million), Taiwan ($112.674 million), Japan ($92.413 million), South Korea ($76.016 million) and Malaysia ($63.557 million).
Last month alone, the bilateral merchandise trade came to $587.59 million, down 17.41 per cent from February 2022 but up 1.10 per cent from January 2023.
Cambodian imports from the US reached $20.301 million, down 22.5 per cent year-on-year but up 8.2 per cent month-on-month, while exports were $567.288 million, down 17.21 per cent year-on-year but up 0.86 per cent month-on-month.
The Kingdom registered a monthly trade surplus with the US of $546.99 million in February, shrinking by 17.00 per cent year-on-year but expanding by 0.61 per cent month-on-month.
Speaking to The Post on March 15, Royal Academy of Cambodia economics researcher Ky Sereyvath blamed the decline in Cambodian-US trade as well as orders from the latter on the slowdown in economic growth faced by the superpower, which he tied to Covid-19, inflation and other financial hurdles, geopolitical conflicts, and the fighting in Ukraine.
“The decline in exports to the US is due to the US economy, which has been in crisis since the second half of 2022, when the US government introduced policies to reduce inflation that resulted in some snags in the financial system, coupled with an economic downturn in parallel with the crises caused by the war between Russia and Ukraine,” he said.
Given its position as the world’s largest economy in nominal terms, crises in the US affect Cambodia and other countries, he stated.
“Negative impacts are not exclusive to exports to the US market, they’ve also been felt in exports to other specific major countries since the fourth quarter of 2022,” Sereyvath said, commenting that the slowdown in global economic activity is not showing any apparent signs of letting up.
In a recent interview with The Post, Cambodia Chamber of Commerce vice-president Lim Heng remarked that positive trends among the Kingdom’s exports have become rather scarce in light of the current global crises, even as Covid-induced shocks wane.
Orders from the US and other major markets will only see a meaningful recovery if global conditions return to more normal pre-2020 levels, he opined.
“The circumstances surrounding imports and exports depend on economic growth. If the economy grows, orders will jump.”
GDCE figures show that Cambodia’s international merchandise trade volume reached $6.848 billion in the first two months of 2023, marking a 21.77 per cent year-on-year drop.
Cambodia imported and exported $3.563 billion and $3.285 billion worth of goods, registering declines of 30.93 per cent and 8.63 per cent year-on-year, narrowing the Kingdom’s international trade deficit by 82.25 per cent to $277.179 million.
On January 25, Ministry of Economy and Finance permanent secretary of state Vongsey Vissoth revealed that the government had revised down its 2023 growth forecast for the Cambodian economy to 5.6 per cent versus the 6.6 per cent it put forth in October, citing uncertainty about global economic growth tied to the Ukraine conflict, climate change and the Covid-19 crisis.
Although fallout from Covid-19 has subsided, the Ukraine crisis and climate change will put significant downward pressure on global economic growth, with the US, EU, China and other major buyers of Cambodian goods facing particularly grim prospects, he stated.
Nonetheless, the latest growth forecast figure – which Vissoth affirmed had been personally approved by Prime Minister Hun Sen – is considerably greater than the 2.7-per-cent growth rate estimated for the global economy, he noted.