Cambodia Economic Update, June 2021

After contracting by 3.1 percent in 2020, Cambodia’s economy has gradually recovered. The recovery is, however, uneven, partial, and volatile in part due to the re-introduction of a domestic lockdown, triggered by recent flare-ups of coronavirus infections. Like many countries in the region, Cambodia has been hit hard by global demand shock and coronavirus-related shutdowns which have had predictably uneven economic impacts across sectors. The agriculture sector has been relatively resilient in the face of the coronavirus shock. In addition, it has been boosted by increased investment, thanks to good prospects of the newly signed Cambodia-China Free Trade Agreement (CCFTA) and Regional Comprehensive Economic Partnership (RCEP).The manufacturing sector sharply contracted last year, but appears to have gradually recovered since, as it has adapted to changing external conditions. The easing of the traditional manufacturing industries, namely garment, footwear, and travel (GFT) goods has been partly offset by the expansion of the newly emerging manufacturing (electrical, electronic and vehicle parts including bicycles) and agroprocessing industries. Parts of the services sector such as accommodation, restaurants and transport continue to be hit hard by slowdown in domestic and international tourism, while wholesale and retail trade has managed to slowly recover, supported by a gradual revival in domestic economic activity.