The economy of Cambodia is to suffer the effects of two hard blows in the coming months and years. The first is the European Commission’s announced intention to scale back its “Everything But Arms” (EBA) preferential trade arrangement with Cambodia and the second is the novel Coronavirus (COVID-19) pandemic.
These events are laying bare the structural weaknesses of Cambodia’s economy, which is over-reliant on the European Union for market access and on China for production capacity, investment and tourist inflow. Cambodia’s most vulnerable citizens, particularly women who work in the garment industry, low-skilled workers and those who have just been lifted from poverty, will feel the brunt of the fallout.
The Asian Development Bank and the World Bank have each warned policymakers of the precarious state of the “near poor” in Cambodia. According to official estimates, the current poverty rate is below 10 percent (compared to 47.8 percent in 2007). Although the nation has achieved great success in its fight against extreme poverty, more than 70% of Cambodians still live on less than US$3.20 a day.