The Cambodian economy is poised for a significant recovery in 2024, with an expected growth rate of 6.0%, as reported by the Ministry of Economy and Finance.  The optimistic projection is attributed to the gradual resurgence of the global economy and the stabilisation of domestic economic activity, particularly in line with Cambodia’s key trading partners.  The ministry anticipates continued growth in the coming years, forecasting rates of 6.3% for 2025 and an average of 6.6% for 2026-2027.  Despite these positive economic indicators, many Cambodians express dissatisfaction with their living conditions, casting a shadow over the promising GDP numbers. Phan Phalla, secretary of state at the ministry, explained that the GDP growth figures are derived from two main categories: actual calculations based on the previous year's GDP data from the National Institute of Statistics (NIS) and growth forecasts influenced by global economic trends.  "Cambodia's economy depends on [trading partners] like the EU and the US for exports, and on China for imports," said Phalla. "For example, if the European economy improves, it means that consumption and orders from Cambodia will increase.” Phalla acknowledged the concerns about the disparity between the GDP growth figures and the real-life experiences of many Cambodians.  “A positive growth forecast indicates better economic activity, which theoretically leads to more jobs and higher incomes,” he said. “However, this does not mean that every individual feels the benefits immediately or equally.”  He pointed out that sectors such as banking have thrived, providing numerous high-paying jobs, while others like tourism have struggled to recover from the Covid-19 pandemic. The tourism industry, once a cornerstone of the country’s economy, saw a dramatic decline during the pandemic, with tourist numbers plummeting from over 5 million to mere tens of thousands. 

The Q&A session chaired by finance ministry secretary of state Phan Phalla and planning ministry secretary of state Seng Vannath. Hong Raksmey

Although there has been some recovery, the sector remains far below its pre-crisis levels.  Phalla noted that the industrial sector, while contributing to economic growth, has also not fully bounced back to its former vigor.  “In terms of income, it exists, but not as much as before,” he remarked. Despite the promising GDP growth, the economic outlook remains highly uncertain due to the global and regional economic landscape, which continues to grapple with multiple crises and a rapidly changing socio-economic structure.  These uncertainties pose potential risks that could either bolster or hinder Cambodia’s economic trajectory. Ung Luyna, director-general of the finance ministry’s General Department of Policy, highlighted the role of non-garment industries in driving economic growth in 2024 and 2025.  “The garment sector has somewhat recovered from the downturn in 2023,” said Luyna. “The decline in the garment sector had a devastating effect on the general population as workers experienced lower wages, which impacted retail sales.”  The export of solar products, vehicle tyres and bicycles has become increasingly significant, marking a shift from the traditional reliance on garment exports.  However, the garment sector, despite some recovery, continues to feel the aftershocks of its previous downturn, which had a severe impact on workers’ wages and retail sales. Luyna also pointed out that the import of luxury cars has decreased considerably, indicating a shift in consumer spending patterns.  He said this adjustment reflects broader economic changes and the government’s efforts to promote other sectors through various measures, including tax exemptions, to sustain economic growth. Keo Chettra, director of the National Accounting Department at the Ministry of Planning, shed light on the regional disparities in GDP across the country.  “Oddar Meanchey province recorded the lowest GDP, while Preah Sihanouk and Phnom Penh led with more than $4,000 and $3,000 per capita, respectively,” said Chettra. He explained that the calculation of GDP was conducted according to UN standards based on the production of each province.  “For instance, in Stung Treng province, the production from a large dam is included in the province's GDP,” said Chettra.  Phalla stressed the importance of adapting to the evolving economic landscape.  “As we develop into a richer country, some might say, ‘No, I still want to be poor,’” he remarked, underscoring the inevitable trade-offs that come with economic progress.  He emphasised the need for Cambodia to advance from being a poor country to joining the ranks of developed nations, even if it means losing certain benefits. Rejecting the notion that GDP growth is pursued to increase foreign debt, Phalla highlighted the necessity of reflecting the realistic economic situation.  He called for a focus on developing the processing capabilities of both garment and non-garment industries to drive sustainable GDP growth. However, Meas Sok Sensan, spokesman for the finance ministry, said that the government has never taxed the income of low-income individuals. Civil servants are also exempt from payroll tax. "For small enterprises, we never put pressure on them," he told The Post. "If there is enough revenue, the government will be able to increase spending and efficiency, such as by strengthening public services for the people and fulfilling obligations, including improving infrastructure."