Cambodia's economic growth is estimated to reach 7.2 per cent this year, driven by garment export, construction, and services sectors.Growth has held up well in Cambodia despite domestic uncertainty and instability in neighboring countries. Overall macroeconomic management has been good, with fiscal consolidation underpinned by improved revenue administration.
With the expectation of renewed confidence and the return of political stability after ending a yearlong political deadlock in July 2014, bolstered by a strengthening global economy, Cambodia's real economic growth rate for 2015 is expected to improve further, achieving 7.5 per cent.
The downside risks to forecast growth are potential further labor unrest and the high seasonal floods as well as regional political uncertainty.Garments continued to be Cambodia’s key engine of growth, while construction overtook the decelerating tourism and crops sectors as the second most important growth driver.
The country has made good strides in improving maternal health, early child care and primary education programs in rural areas. Poverty has fallen sharply. However the vast majority of families who escaped poverty were able to do so only by a small margin. About 90 per cent of them live in the countryside.
Cambodia still faces a number of development challenges, including effective management of land and natural resources, environmental sustainability, and good governance. Corruption and weak public service delivery impede inclusive development. The key challenge going forward is to stimulate the agricultural and tourism sectors to once again become strong engines of growth supporting poverty reduction, as well as to expand and sustain growth in manufacturing including garments.