Large trade deficits have been driven by imports of gold, reaching $4.08 billion in the last 9 months as traders seize profit opportunities, according to the World Bank.
On Thursday, Ly Sodeth, Senior Economist at the World Bank, said in a virtual briefing while Cambodia’s garment, textile, footwear, and bicycles export sectors are growing, the trade deficit has widened.
“The question is why the exports were doing quite well, what happened to trade deficit?” said Ly Sodeth. “This trade deficit is driven largely by imports of gold.” He added Cambodia has imported a total of $4.08 billion worth of gold in the last nine months.
“Why is Cambodia actually importing a lot of gold?” he said. “The reason is the gold price remains favorite, so gold investors, gold traders actually see this an opportunity to import gold.”
The economy is projected to grow 2.2% this year, due to a resurgence of COVID-19 cases. World Bank said this slowed recovery, especially of the service, construction, and real estate sectors.
The economy is expected to continue to recover amid the rollout of COVID-19 related restrictions. Growth is forecasted to reach 4.5% in 2022.
Cambodia’s exports stood at US$5.8 billion this year, driven by garment, travel goods, and footwear. The World Bank said this represents a 15.2% growth.
With the United States now becoming the largest market for Cambodian exports of travel goods and footwear. This year, the exports rose 31.9% to US$3.4 billion, despite GSP program temporary expiration.
Additionally, Cambodia’s exports to the EU grew 15.0% to US$2.2 billion, despite the partial EBA withdrawal over human rights and political concerns in 2020.