A recent Ministry of Economy and Finance report on the 2020 budget pointed to a potential slowdown in the Cambodian economy next year, dropping from an estimated 7 percent in 2019 to 6.5 percent in 2020.
The estimate was released on December 25 as part of a report on next year’s budget and projects GDP growth to be 6.5 percent, a dip it says will result from potential slowdown from “uncertain trade preferences,” a thinly-veiled reference to the EU’s “Everything But Arms” trade scheme.
“[The] garment sector is estimated to have decreased growth due to slow global economic growth and the expected impacts of uncertain trade preferences with some partners,” the report reads.
Last week, International Monetary Fund warned of serious downside risks to Cambodia’s economic outlook, saying full suspension of the ‘Everything But Arms’ trade preferences would see Cambodia’s GDP growth rate drop by 3 percentage points.
The EU Commission has initiated an investigation in Cambodia’s human rights record that could lead to potential suspension of the trade privileges, which could hurt the prospects of the critical garment and footwear sectors.
Preliminary findings of the report, accessed by VOA Khmer, shows that the EU Commission had not seen any improvement in the country’s human rights record, also pointing to a further worsening since the announcement of the investigation.
Ruling party Senator Sok Eysan said Cambodia did not want the EBA to be withdrawn but that the country could not comprise on certain issues as highlighted by the EU, such as dropping treason charges against opposition leader Kem Sokha.
He claimed that he will wait and see what the EU decides, but, going by the experience of the country’s neighbors, he said Cambodia would be able to survive an EBA withdrawal.
“I think Vietnam and Thailand don’t have EBA, but why can they survive until now?” he said. “Cambodia will not die immediately without EBA. It will not be unfortunate like that.”
Political analyst Meas Nee said there seemed to be no inclination from the government to find a compromise with the EU, because any concessions would be a threat to their hold on power in the country.
“It is very difficult for the ruling party to restore the situation since they are worried about [losing] power,” he said.