The global financial crisis has had a serious impact on the Cambodian economy, which has been heavily dependent on the world economy. The main drivers of high growth in the past decade, garments, tourism and construction, are all facing setbacks. The severest impacts are in the garment industry, which exported US$2.9 billion in 2008, accounting for 65% of total exports: in the past six months, 51,000 workers have been laid off, a significant proportion of the 350,000 workers in this leading industry. Future orders are in doubt. Tourism registered a slowdown in 2008 and there are indications that it will decline in 2009. The International Monetary Fund (IMF) has recently projected a 5% fall in the sector, citing less world demand. Construction is also set to decrease, as foreign investors in real estate are either scaling back or suspending their mega projects as a result of the credit crunch at home. The global financial crisis has burst the bubble in the land and real estate markets, where were arguably over-buoyed by the global bubble of recent years. This has directly reduced construction activities and demand in general. The agriculture sector is expected to grow in volume significantly to offset declines in the rest of the economy. However, some crops face lower prices or no markets at all as world conditions change, which means less income and a harder situation for farmers, especially those who took loans to expand production in response to the rising prices in the first half of 2008.
The Cambodian government has taken a number of policy measures, such as loosening monetary policy and piloting subsidies in the agriculture sector. Training schemes have been planned for laid-off workers. Tax measures so far have included the suspension of the 1% advance profit tax and continuance of the profit tax holiday for certain garment factories. A more expansionary budget has been set for 2009 to serve as a stimulus and to accommodate plans to augment spending on infrastructure, agriculture and social programmes.