cambodia: macroeconomic challenges
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CAMBODIA:Macroeconomic Challenges
Carson ChristianoBen ThornleyApril 23, 2009
Overview
• Cambodia’s Rapid Growth• Macroeconomic Imbalances• Vulnerability to Global Recession• Recommendations
Cambodia’s Rapid Growth
Per capita GDP doubled from US$285 in 1997 to US$593 in 2007
Population Growth
A Changing Economy
0
10
20
30
40
50
60
Agriculture Industry Services
20002007
% of economy
Open For Business
Macroeconomic Imbalances:Accumulating Debt
Macroeconomic Imbalances:A Spike in Prices
Macroeconomic Imbalances:Real Riel Appreciation
Macroeconomic Imbalances:Narrow Economic Base
• Economy is dependent on very few industries: tourism, construction, agriculture, and garments
• Garments account for 88% of export volume
• Demand from US and UK shrinking
• Garment exports are down 27%
• 30,000 workers laid off in the past 12 months
Vulnerability to Shock:Impact on Aggregate Demand
Shortfall is equal to KHR 2.4 trillion, or 6.5% of forecast GDP
In 2007 and 2008, the IMF forecast GDP growth rates in Cambodia of 7.75% in 2008 and 4.75% in 2009. In November 2008 the IMF revisited its GDP growth forecasts to 6.5% in 2008 and -0.5% in 2009.
Vulnerability to Shock:Dependence on Foreign Assets
Recommendations
1. Implement a fiscal stimulus2. Diversify and formalize economy3. Strengthen regional integration
1. Fiscal Stimulus
AA
DD1 DD0,2
Yr Yf
2. Diversify and Formalize Economy
• Develop human capital• Leverage core competencies• Explore new capabilities• Strengthen investment climate
Information Board, Kampong Chhnang Province
3. Regional Integration
• Explore new markets• Increase inter-regional trade• Leverage expertise of ASEAN partners
Questions?
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