PHNOM PENH, Oct 4 (Reuters) - Cambodia’s garment exports grew 16.1 percent in the first half of 2018 from the same period last year, the World Bank said on Thursday, boosted by a trade agreement that allows Cambodia to export travel goods to the United States duty free.
“This is partly supported by the new agreement with the U.S. on travel goods,” said Miguel Martin, the World Bank’s senior country economist in Cambodia.
Washington in 2016 expanded trade preferences, under changes to the Generalized System of Preferences (GSP), 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 around 10 percent of the economy.
The Southeast Asian economy is expected to grow 7 percent this year, compared with 6.9 percent in 2017, the Bank said, adding that growth will ease to 6.8 percent in 2019 and 2020.
Cambodia held a general election in July which Prime Minister Hun Sen’s ruling Cambodian People’s Party (CPP) won.
Critics said the vote was flawed because of the lack of a credible opposition, among other factors.
Following the election, a European Parliament subcommittee in August called for measures against Cambodia.
Under the EU’s Everything But Arms (EBA) scheme, 47 less developed countries, including Cambodia, enjoy duty free access to the EU for exports of all products except arms.
Similar trade preferences in the United States have helped Cambodia build a garment industry on low-cost labor.
The bank on Thursday said that one risk was a potential revision of trade preferences, another was a slowdown in the agriculture sector, which is now recovering.
Foreign direct investment is estimated to have increased by 14.3 percent during the first six months of 2018, more than half of it Chinese investment in Cambodia’s real estate sector.
Reporting by Prak Chan Thul Editing by Amy Sawitta Lefevre and Kim Coghill