Cambodia's economic growth has been high since the early 2000s. Cambodia is one of the top ten countries in the world which has had a high growth rate and reports from the World bank and IMF shows a steady annual growth of approx. 7%. Garment exports account for approximately 80% of Cambodia's total exports. Tourism, construction work and agriculture have also contributed to the growth.
Despite the rapid growth rate Cambodia still remains the second poorest country in Southeast Asia after Myanmar. The rapid economic growth has led to poverty reduction and Cambodia has made significant progress on most of the Millennium Development Goals. However, many challenges remain. High income inequality, low nutritional standards in children, low participation in secondary education, women's representation in political bodies and the protection of the environment are some of the challenges.
The financial sector has expanded rapidly in recent years. The number of banks has increased and credit expansion to the private sector in 2012 was among the highest in Asia. However, the financial sector is still underdeveloped.
The government´s policy is free trade friendly and the aim is to further increase the openness through membership in the WTO and in the process towards the establishment of an ASEAN Economic Community (AEC), 2015.
A major challenge for Cambodia is to diversify exports, both in terms of products and markets. The current extreme dependence on garment exports to Europe and the United States brings great vulnerability to global economic changes. There is a strong potential for increased agricultural exports to key markets such as China, Indonesia, India and the Middle East. In the long term the industrial base must be diversified and developed.
Cambodia has the potential to have a rapid economic development over the next 10 years. In order to utilize the opportunities Cambodia must fight corruption and improve the rule of law. An important step was taken in 2010 through the adoption of an anti-corruption law and the establishment of a national agency for combating corruption. Cambodia is still seen as one of the most corrupt countries in the world (number 150 out of 167 countries in Transparency International's index for 2015).