Cambodias garment industry led its growth in 2015

Cambodia's garment industry led its growth in 2015

Cambodia's garment industry is leading the country's real growth, new figures show, making it one of the fastest growing countries in East Asia. 

The country's growth is estimated to have reached 7% in 2015, with a further 6.9% of growth forecast for 2016, according to the latest Cambodia Economic Update from the World Bank. The garment and construction sectors are leading this, but the report warns of downside risks to the outlook as continued appreciation of the US dollar, slower economic recovery in Europe, spillovers from a slowdown in the Chinese economy, and potential labour market issues continue to create challenges.

Given Cambodia's narrow production and export base and concentrated export markets in the European Union and US, the World Banks says the country is exposed to increased competition which gradually constrains growth.

"Scaling up public investments to address key infrastructure bottlenecks and further improving the business climate will be important for Cambodia to remain competitive," noted Alassane Sow, the World Bank's country manager for Cambodia.

Following a slowdown in early 2015, garment exports rebounded in the second half of the year, ending at a nominal year-on-year growth rate of 12.3%, compared with 9.2% in 2014.

The most recent Cambodian Garment and Footwear Sector Bulletin released by the International Labour Organization (ILO) earlier this month showed garment and footwear exports continued to see strong growth during 2015, albeit it at a slower rate than the year before and with footwear far outpacing clothing. 

For the year as a whole, total garment and footwear exports reached US$6.3bn, up 7.6% over the $5.8bn booked a year earlier. Even so, this is slower than the 9.6% growth seen between 2013 and 2014.

The footwear sector continued to accelerate with a 21.8% surge in shipments to $538m, while exports of garments rose by 6.5% to $5.7bn.

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