NBC's report: FDI increased nearly 5%, boosting Cambodia's balance of payments surplus

According to The National Bank of Cambodia (NBC) Annual Report 2024, The balance of payments in 2024 is estimated to be in surplus of US$432.5 million, an increase of 4.9 times compared to 2023 (US$73.2 million). This surplus was due to the increase in net foreign assets in the financial account, while the current and capital account surpluses decreased.

The report states that, the current and capital accounts recorded a surpluses of 0.1% of the gross domestic product (GDP) compared to a surplus of 1.6% of GDP in 2023. The decrease in the surplus was due to: the increase in the merchandise trade deficit, the decrease in the secondary income surplus, while the surplus of services increased and the primary income deficit decreased.

The merchandise trade deficit increased by 50.6% compared to 2023 (down -66.2%), and this was significantly driven by the increased domestic demand and imports to produce export goods.

Overall, imports increased by 17.7% compared to 2023, of which imports of vehicles increased by 39.1%, construction materials and equipment increased by 3.2%, garment materials increased by 22.3%, while the imports of food and beverages increased by 16.9%, and petroleum increased by 10.6%.

Exports grew by 13.5%, with those of garment exports increasing by 23.4% (-13.2% in 2023), agricultural products increased by 16.5% (32.9% in 2023), of which rubber increased by 12.8%, rice increased by 5%, and other agricultural products increased by 19%. In contrast, other products decreased by -1.4% (up 15.4% in 2023), including: electronics decreased by -42.2% and bicycles -12.8%, while tires increased by 1.3 times.

The NBC's report also highlighted that the net services account surplus increased by 31.9% compared to 2023, mainly because of the return of a large number of international tourists (travel service credits increased by 17.9%), at the same time, the primary income account deficit contracted by 50.3% due to a 23.8% decrease in outward payments and a 27.9% increase in inward payments. In contrast, the surplus of secondary income account decreased by -0.2%, with the royal government grants decreased by -9%, while inward private transfers (net) increased by 1.4%.

It added that, the international reserves increased to US$22.5 billion, up 12.6% compared to 2023 (US$20 billion), equivalent to seven months of prospective imports of goods and services.

The financial account balance showed an increase in net foreign assets of US$371.7 million compared to net foreign assets of US$618.6 million in 2023, supported by foreign direct investment inflows, while net foreign assets in other investment and portfolio investment increased. Foreign direct investment inflows were US$4.2 billion, up 4.9%, mainly due to a 17.1% increase in investments in the non-financial sector, and a 35.5% decreased in investments in the financial sector.

Investment in the manufacturing sector increased by 46% (investment in garments sector increased by 73.6%, footwear by 27.5%, traveling products by 63.8%, packaging by 66.8%, and others by 45.5%, while solar manufacturing decreased by -37.5%), accommodation sector by 19.1%, the agriculture sector by 11.9%, the energy sector by 1.8%, and others by 33.9%. In contrast, the real estate sector decreased by -24.8%, the construction sector by -32.4%, and the mining and quarry sector by -63.9%, the report added.

In addition, other investments showed an increase in net foreign assets of US$3.2 billion (up 9.5% compared to 2023), due to an increase in deposits and portfolio investments abroad, coupled with an increase in the financial sector's external debt repayments, while the government’s external debt decreased by -10.2%.