The World Bank predicts Cambodia's GDP will grow more than 6.9 percent in 2018, after its economic performance ranked it sixth best in the world over the previous 10 years and pushed it into the lower-middle-income country group. The two big drivers are tourism and garment manufacturing. Between 2012 and 2016, tourism to Cambodia increased to more than 5 million visits from 3.5 million, according to the government of Cambodia. Tourism contributed 12 percent, or $2.4 billion to Cambodia's economy in 2016, according to the World Travel & Tourism Council, a number that is expected to grow by 7 percent a year over the next 10 years.
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Those are huge numbers for a country with a little more than 15 million people. And Cambodia's projected economic growth rate remarkably outflanks China's. One reason may be because Cambodian companies have been able to position themselves as low-cost, reliable alternatives to Chinese factories, where wages are rising, according to Afshin Molavi, senior fellow at Johns Hopkins University Paul H. Nitze School of Advanced International Studies.
"Cambodia is becoming part of an interesting Asian strategy for any of the global multinationals," said Molavi, also co-director of think tank Emerge85. "We're seeing [the growth] in real estate. There is a lot of construction going on. When I look at the Phnom Penh Post, I see lots of stories about the middle class buying properties."
Cambodia still lives under a shadow, however. Memories of the genocide from 1975–79 still color the world's perception of Cambodia, though they are also driving the country's young people to overcome that perception. The authoritarian government hasn't helped: It has been cracking down on civil society, dissolving the largest opposition party in November.
That makes things tricky for big multinationals, like Walmart. A spokeswoman for the company said it sources apparel, footwear, home goods and accessories in Cambodia. "We recently discussed with the government potential to increase our sourcing further, as well as the importance and our expectations of the protection of civil rights in the countries from which we source. We respectfully asked the Cambodian government to continue to improve working conditions for Cambodian factory workers and treat civil society with fairness, in accordance with international standards and norms."
There remains a serious issue with income inequality in the Asian nation. About 13.5 percent of Cambodia's population lives on less than $2 a day, according to the World Bank. That is down from 47.8 percent in 2007, and income levels have barely risen for many people. Cambodia stagnated for the latter part of the 20th century partly because of internal conflict and the lack of infrastructure in rural areas. There are still unexploded land mines left over from bombing during the Vietnam War. In a sign of Cambodia's increasing importance in Southeast Asia, the Trump administration aimed to cut U.S. State Department funding of $2 million for land mine clearance — and then reinstated it after an outcry.