Cambodia's Political and Economic Outlook for 2015 and Beyond

The Kingdom of Cambodia has had its share of political and economic rise and fall. The most recent rise was enjoyed from 1998 to 2008 as Prime Minister Hun Sen gained dominance over the domestic political scene and the GDP grew at the highest average annual rate in Asia, second only to China. After experiencing a minor economic hiccup related to the USA's housing mortgage crisis, Cambodia continued on the right track economically. However, Hun Sen endured a major political challenge in the 2013 National Assembly elections when three popular political rivals united causing the ruling Cambodia People's Party to lose its super majority. This article takes a closer look at the near future of the political and economic outlook of the Kingdom of Cambodia.

According to the Economist Intelligence Unit (EIU) country report for September 2014, the Prime Minister Hun Sen and his Cambodian People's Party (CPP) will continue to hold power until 2018. However the last general elections held in 2013 demonstrated dissatisfaction with the Prime Minister's recent performance. A major challenge was mounted by the Khmer National Rescue Party headed by CPP political rivals Sam Rainsay, Khem Sokha, and famed female politician Mu Sochua.

The results of the July 2013 national election meant that the ruling CPP had lost its super majority winning less than the required 2/3rd's majority but retaining a simple majority. The results were contested by the new opposition party leaders which believed their CNRP had won 63 seats to the CPPs 60. The National Election Committee certified the results in the CPP's favor which led to a year-long boycott of the National Assembly and much civil unrest in the capital city of Phnom Penh. In July 2014, one year after the elections, the CPP and CNRP settled their differences and those elected as National Assembly members from the CNRP took their places in the new government. The country analysts from the EIU foresee the ruling CPP will likely be more open to reform, yet difficulties between the ruling and opposition parties are likely to continue for the time ahead.

Essentially, Hun Sen has retained power as the top governing official in Cambodia since the mid-1980s when he brokered a deal between Vietnam and Cambodian King Norodom Sihanouk. The Prime Minister solidifed his grip on the country's political reins when he and his loyal following staged a coup d' etat in 1998. Since taking full power over Cambodian affairs in 1998, the country's economy grew at a remarkable rate despite outcries of corruption and the relative poverty of a large portion of the population.

According to the EIU September 2014 report, Cambodia's economy will heat up in 2014-2018. Cambodia's real GDP is expected to expand at a healthy rate for the near future projected growth rates of 7.2% in 2014, 7.3% in 2015, 7.5% in 2016 and 2017, and 7.7% in 2018. This general sense of optimism is founded on the improved political stability and the projected increase in external demand.

This does not mean that the projected growth rates will not be void of potential risks. The EIU reporters see continued growth in the agricultural sector tempered by the possibility of extreme weather. They also see the garment industry retaining its dominance in Cambodian manufacturing with additional manufacturing growth potential in the new foreign trade zones. All these forecasts depend on actual political stability and a limitation of worker unrest and strikes that could forestall the countries economic growth outlook.

Cambodia and Thailand

Cambodia's relationship with Thailand has improved in the past year due to the UN's International Court of Justice's declaration that the Preah Vihear temple belongs to Cambodia. Even so, tensions continue to persist due to continued territorial disputes along the border and the Gulf of Thailand. The current political problems in Thailand could have an adverse effect on the Cambodia-Thailand relationship if Thailand's new military government takes a more nationalist stance.

Cambodian and the West

While the United States and the European Union will continue their involvement in Cambodia, the relations will be less than they could be due to continued objections over human rights issues as well as suspected foul play in the 2013 national elections. The recent deal made between the the CPP and the CNRP is likely to lead to better between the European Union and Cambodia relations going forward.

Cambodia and China

China is forecasted to continue its generous stance towards Cambodia. China's economic help outpaced the USA's contributions by a wide margin from 2011 to 2013. China's aid came with no overt strings attached which makes it more appealing to Cambodian political officials.