The industrial sector in Cambodia is projected to rebound by 7.9% in 2024, following a slowdown in 2023. This recovery is expected due to a resurgence in the garment sector and continued momentum in the non-garment manufacturing sector and the food and beverage industry.
1. Garment Sub-sector
The garment sector, which contracted by approximately 3.5% in 2023 due to a steeper-than-expected decline in external demand, is projected to rebound by 7.5% in 2024. This recovery is anticipated due to a gradual increase in global demand and easing inflationary pressures.
2. Non-garment Manufacturing Sub-sector
The non-garment manufacturing sector is expected to maintain strong growth of 13.0% in 2024, following a growth rate of 17.0% in 2023. This growth is supported by the recovery of the tourism sector and the ongoing restoration and development of the domestic economy. Production activities serving exports, such as furniture, tires, electronic components, and solar panels, are expected to remain promising, especially exports to the US, China, and regional markets, including ASEAN.
3. Construction Sub-sector
The construction sector is projected to recover slowly at a growth rate of about 1.1% in 2024. This recovery is due to the expected continuation of low- and middle-income housing construction activities and a gradual recovery of foreign investment flows. However, the sector will not be able to achieve high growth as before the COVID-19 crisis, when investment and much of the demand were driven by speculation.
4. Food and Beverage Sub-sector & Beverages and Tobacco Production Sub-sector
The food and beverage industry, as well as the production of beverages and tobacco, is estimated to achieve growth of 7.7% in 2024. This growth is supported by government policies to promote small and medium-sized enterprises and the changing trend of traditional consumer behavior towards modern markets such as supermarkets, shops, and food outlets, and the increasing consumption of health drinks and non-alcoholic beverages.
Government Initiatives
The government has introduced a number of laws and policies, such as the “Law on Investment of the Kingdom of Cambodia”, aimed at increasing the attractiveness of the investment environment. The government has also established the Cambodia SME Bank to provide concessional loans and low-interest rates to enterprises in priority sectors. The “Skills Development Fund” and “Entrepreneurship Fund” have also been initiated to strengthen productivity by improving the quality of skills and addressing issues related to the supply of skills and labor market demand.
The increase in population and income (domestic market) will also attract foreign and regional investment to increase investment in this sector in the future. The strengthening of various policies will help promote the development of this sector, especially helping to strengthen the productivity and compliance of small and medium-sized enterprises.
Source: Ministry of Economy and Finance. (2024). Medium-term Public Financial Framework 2025-2027
Photos by: Ministry of Industry, Science, Technology & Innovation ក្រសួងឧស្សាហកម្ម វបន
