Foreign trade improves in May thanks to export rise

On the flip side, after a banner month in May, the trade deficit for the period narrowed by nearly three-quarters on an annual basis, while exports rose more than one per cent half-on-half, provisional GDCE data in “International Merchandise Trade Statistics” bulletins indicate. Last month’s results may portend brighter times ahead for the Kingdom’s international trade.

In the January-May period, Cambodian exports clocked in at $9.183 billion, down 2.43 per cent year-on-year from $9.412 billion but up 1.15 per cent half-on-half from $9.079 billion. At the same time, imports stood at $10.109 billion, down 22.58 per cent year-on-year from $13.057 billion and down 14.92 per cent half-on-half from $11.882 billion.

The Kingdom’s trade deficit – the amount by which a country’s imports exceed its exports – for the five-month period came in at $925.608 million, shrinking by 74.60 per cent year-on-year from $3.645 billion as well as by 66.99 per cent on a semi-annual basis from $2.804 billion.

Cambodia’s top trading partner for the January-May period was mainland China with $5.986 billion, up 19.7 per cent year-on-year, followed by the US ($4.817B; up 51.8%), Vietnam ($3.261B; up 22.3%), Thailand ($2.297B; up 22.8%), Singapore ($2.079B; down 38.2%), Japan ($934.143M; up 15.7%), Switzerland ($832.383M; up 115.3%), Hong Kong ($610.601M; up 40.4%), Germany ($609.464M; up 23.9%) and Taiwan ($609.180M; up 18.0%).

Speaking to The Post on June 11, Royal Academy of Cambodia economist Hong Vanak commented that discordance among major powers, Covid-19-related disruptions and the armed Russo-Ukrainian conflict have dragged down international trade in almost every country.

As far as Cambodia is concerned, the sharp drops in imports were largely to blame for the declines in international trade volume, he claimed. Exports, on the other hand, delivered a far more promising performance and may soon rebound, as long as the pace of industrial and agricultural production keeps accelerating, according to Vanak.

“As far as I’m aware, the main reason for the decrease in international trade over the first five months of 2023 is that Cambodia does not import as many goods as it used to, amid a continued increase in domestic production capacity. As a result, even though the volume of international trade has slipped, it’s not a significant concern for the country’s economic growth.

“In addition to reducing Cambodia’s reliance on imports, the uptick in domestic production will give the Kingdom more goods to sell on international markets,” he argued.

He suggested that Cambodian economic indicators are pointing towards a brighter future, even in the midst of global economic turbulence, noting that the Kingdom’s trade balance has gradually improved.

“Given Cambodia’s current circumstances, I’m optimistic that the trade balance will be in surplus in the near future,” Vanak said.

For reference, Cambodia’s monthly trade balance has been in surplus before, as recently as February 2023, when the GDCE logged exports and imports of $1.717 billion and $1.640 billion, respectively.

In May alone, international trade was to the tune of $4.132 billion, down 14.28 per cent from $4.820 billion in April 2022 (year-on-year), but up 13.52 per cent from $3.640 billion in November 2022 (half-on-half), up nearly 23.05 per cent from $3.358 billion in February 2023 (quarter-on-quarter), and up 5.70 per cent from $3.909 billion in April 2023 (month-on-month), according to the GDCE.

Exports registered $1.949 billion, up 7.94 per cent year-on-year from $1.806 billion, up 13.99 per cent half-on-half from $1.710 billion, up 13.50 per cent quarter-on-quarter from $1.717 billion, and up 5.82 per cent month-on-month from $1.842 billion.

Imports reached $2.182 billion, down 27.59 per cent year-on-year from $3.014 billion, but up 13.10 per cent half-on-half from $1.929 billion, up 33.04 per cent quarter-on-quarter from $1.640 billion, and up 5.58 per cent month-on-month from $2.067 billion.

Cambodia’s top export destination for May was the US with $747.895 million, down 7.2 per cent year-on-year, followed by mainland China ($149.257M; up 55.3%), Vietnam ($142.392M; up 40.0%), Singapore ($119.570M; up 1,819.9%), Thailand ($86.773M; up 52.1%), Canada ($78.661M; down 29.0%), Germany ($77.640M; down 20.5%), Japan ($70.654M; down 3.8%), the UK ($65.404M; down 1.7%) and Netherlands ($51.421M; up 8.3%).

The Kingdom’s top import source for the same month was mainland China with $1.033 billion, up 7.2 per cent year-on-year, followed by Vietnam ($297.758M; down 22.7%), Thailand ($265.833M; down 15.8%), Indonesia ($82.071M; down 13.2%), Malaysia ($65.691M; up 118.6%), Singapore ($58.621M; down 88.6%), Taiwan ($56.423M; down 44.5%), Japan ($55.567M; down 20.4%), South Korea ($41.254M; down 12.4%) and India ($21.886M; down 23.5%).

Cambodia Chamber of Commerce (CCC) vice-president Lim Heng remarked that improvements have been made in the production of virtually all commodities categories despite the current lacklustre global economic momentum. The Kingdom’s reliance on imports to satisfy domestic demand has also diminished over time, he said.

Exports have also seen recent increases fuelled by this upswing in domestic production capacity, coupled with preferential tariff treatment as well as strong cooperation underpinned by trade agreements, he added.

“The current reductions in international trade volume may be the result of issues amongst large countries, but Cambodia’s production capacity is gradually rising. As the global economy recovers, Cambodian exports will accelerate,” Heng said.

Prime Minister Hun Sen on June 11 pegged the Kingdom’s economic growth rate in 2023 at around 5.6 per cent, from an estimated “5.2 per cent” in 2022. The premier was addressing nearly 20,000 factory workers at an event in western Takeo province’s Tram Kak district.

This figure is consistent with the 2023 forecast unveiled by Ministry of Economy and Finance permanent secretary of state Vongsey Vissoth at a January 25 public forum on macroeconomic management and the 2023 budget law.

Of note, the National Bank of Cambodia (NBC) previously put the 2022 growth rate at 5.1 per cent. However statistical discrepancies and asymmetries in trade and other economic figures are common between different sources.

Provisional GDCE figures show that Cambodia’s international goods trade amounted to $52.425 billion last year, up 9.19 per cent on 2021 and up 174.55 per cent against 2015.

The Kingdom exported and imported $22.483 billion and $29.942 billion, respectively, up 16.44 per cent and 4.32 per cent on a yearly basis, narrowing the trade deficit by 20.60 per cent to $7.459 billion.

phnompenh post