Cambodia’s garment exports grew 16.1 per cent in the first half of 2018. Exports has been boosted by a trade agreement that allows Cambodia to export travel goods to the United States duty free. The US in 2016 expanded trade preferences, under changes to the Generalized System of Preferences, for Cambodia and other least developed countries producing goods such as bags and luggage and accessories for travelers.

Cambodia’s garment industry is the largest employer in the country. Garment exports account for 10 per cent of the economy. The Southeast Asian economy is expected to grow seven per cent this year, compared with 6.9 per cent in 2017. But growth may ease to 6.8 per cent in 2019 and 2020. Foreign direct investment is estimated to have increased 14.3 per cent during the first six months of 2018, more than half of it Chinese investment in Cambodia’s real estate sector.

Under the EU’s Everything But Arms scheme, 47 less developed countries, including Cambodia, enjoy duty free access to the EU for exports of all products except arms. However, one risk the country faces is a potential revision of trade preferences. Another is a slowdown in the agriculture sector, which is now recovering.