Thailand
Cambodia: GFT exports decline by 28% in January
Cambodia’s exports of garments, footwear and travel (GFT) goods declined by over 28 percent in the first month of 2023, a slide on expected lines as international demand remained low for the last six months.
While Cambodia exported GFT goods worth $1.08 billion in January 2022, it managed to export only $782 million in January this year, the trade data released recently by the General Department of Customs and Excise (GDCE) showed.
The sector, which is the biggest export earner for the Kingdom, still accounted for over 50 percent of the total export earnings of $1.5 billion for the country in the month.
The decline in GFT exports could continue for the next couple of months and the demand is expected to pick up by the second half of the year.
Among the GFT goods, knitted apparel brought in $350 million for January 2023, a decline of 33.4 percent, compared to January 2022 while non-knitted apparel articles that earned $205 million went down by 16.5 percent over the same period.
Travel goods netting $117 million for last month slid by 32.3 percent year-on-year. Footwear exports earned $109 million, also showing a decline of 23.6 percent compared to the same period in the previous year.
According to industry experts, export orders for GFT goods would not revive until mid-2023 as retailers in Europe and the US have just too much stock from unsold goods of the previous seasons. Ukraine war and inflation have also caused a downward trend in the global demand for GFT.
Despite a second-half slowdown last year, GFT exports managed to achieve a growth of around 15 percent in 2022 compared to the previous year, rising from $10.99 billion to $12.63 billion. Exports in the second half of last year declined compared to the first half when they showed a growth of nearly 40 percent.
The 2023 economic outlook of the National Bank of Cambodia (NBC), released recently, however, forecasted that the GFT sector in the country would expand (not just exports) by 6.5 percent this year.
While highlighting the role of the GFT sector for the country, Ky Sereyvath, Director General of the Institute of China Studies at the Royal Academy of Cambodia, told Khmer Times on Monday that the sector plays a very important role in the Kingdom’s economy and helped it to fight off the pandemic woes.
“The GFT sector created jobs for local people and this was vital for the country’s recovery from the Covid-19 slowdown,” he said.
Data from the National Institute of Statistics (NIS) also suggested that the continued progress of the GFT sector was crucial for the Kingdom during the Covid-19 pandemic.
The sector accounted for 11 percent of the economy and contributed around 50 percent of Cambodia’s real GDP growth in 2021. This indicated that the GFT sector had been functioning relatively well throughout the Covid-19 pandemic, while other sectors such as tourism suffered greater setbacks.
In March 2022, the Royal Government of Cambodia launched the ‘GFT Sector Development Strategy 2022–2027,’ which underscores the sector’s important role as a major economic growth pillar, with GFT exports averaging over 70 percent of Cambodia’s total merchandise exports over the past decade and more.
The strategy also emphasizes the sector’s direct and indirect contributions to the livelihoods of between 2.5 to 3 million Cambodians.
Despite being one of the key drivers of the Cambodian economy, the GFT sector still faces challenges related to its competitiveness and long-term sustainability. The sector’s current exports are reliant on preferential market access granted by the US and the European Union (EU) which makes it highly vulnerable to the potential withdrawal of such agreements.
Source: https://www.khmertimeskh.com/501238959/gft-exports-decline-by-28-in-january/