GFT Exports Surge 21.64% in January, Boosting Cambodian Economy

In a remarkable turnaround, Cambodia's exports of garments, footwear, and travel goods (GFT) surged by 21.64% in January, reaching a tot...

In a remarkable turnaround, Cambodia's exports of garments, footwear, and travel goods (GFT) surged by 21.64% in January, reaching a total of $967 million. This surge comes as a welcome relief after a period of decline throughout the previous year, injecting optimism into the vital sector of the Cambodian economy, which employs nearly one million individuals.

Positive Growth Across GFT Segments

According to the latest trade data from the General Department of Customs and Excise, all segments within the GFT sector performed admirably in January 2024. Knitted apparel articles and clothing accessories saw a significant growth of 24.3%, bringing in $435 million. Non-knitted apparel articles followed suit, earning $269 million with a robust growth rate of 30.9% year-on-year.

Footwear and Leather Goods Show Resilience

Footwear exports recorded a notable increase of 11.4%, totaling $122 million, while articles of leather and travel goods also experienced growth, reaching $122 million with a 4.1% uptick over the same period. Moreover, other made-up textile articles saw a remarkable growth of 48.1%, amounting to $18,227 in January 2024 compared to the previous year.

Overcoming Trade Barriers

Despite facing trade barriers such as the non-renewal of the Generalized System of Preferences (GSP) by the US and a nearly 20% reduction in Everything But Arms (EBA) benefits by the European Union (EU), Cambodia managed to achieve substantial growth in exports. These challenges underscore the resilience of the Cambodian GFT sector in navigating global trade dynamics.

Critical Role in Employment and Economy

The GFT sector remains a cornerstone of Cambodia's economy, generating employment opportunities for approximately one million individuals and contributing significantly to the country's GDP. In 2021, the sector accounted for 11% of the economy and contributed around 50% of Cambodia’s real GDP growth.

Hope for Sustained Growth

There is optimism that the positive momentum witnessed in January will continue throughout the year, potentially mitigating job losses and factory closures. Initiatives such as the government's provision of a $40 monthly allowance to suspended workers highlight efforts to support the sector amidst global economic challenges.

Challenges and Competitiveness

Despite the recent growth, Cambodia faces stiff competition from other Asian countries, particularly Bangladesh, which recorded a 10% increase in garment exports in 2023, reaching a record high of $47 billion. This underscores the need for Cambodia to enhance its competitiveness through skills development and the adoption of cost-effective measures like renewable energy sources.

Expert Perspectives

Massimiliano Tropeano, Sustainability and Garment Expert of the European Chamber of Commerce in Cambodia, emphasized the importance of progressive regulations and tariffs to boost competitiveness. Implementing measures such as promoting solar energy could not only enhance competitiveness but also contribute to job creation and revenue generation for the country.

Conclusion

The surge in GFT exports in January signifies a promising start for Cambodia's economy in 2024. Despite facing challenges, the resilience and adaptability of the GFT sector bode well for sustained growth and economic stability in the country. Efforts to enhance competitiveness and address underlying structural issues will be crucial in ensuring long-term prosperity for Cambodia's economy.