Having edged up in 2016, growth is expected to level off at a robust pace in 2017. Cambodia's economy is set to continue benefitting from lively domestic demand, favored by rapid credit growth, moderate inflation and a rise in the minimum wage. Meanwhile, exports of textile products will continue to benefit from the country's growing integration in the world economy. The construction sector is benefiting from the booming property market and the development of tourism-related infrastructure. Tourism, in particular from Asia, is expanding rapidly. Foreign direct investments look set to remain high, especially in the textiles sector, despite steady increases in the minimum wage for the sector, which will be set at USD 153 USD per month (+9.3%) in January 2017. This renewed rise will hit the country's price competitiveness, especially in comparison with neighboring countries like Bangladesh and Myanmar, while the strong dollarization of the economy could adversely affect Cambodian exports if the dollar appreciates. Nonetheless, this increase should ensure relative social stability at a time when the country is experiencing regular episodes of political and social instability, which hamper activity. Meanwhile, investment will remain limited by the country's infrastructure shortcomings, especially regarding energy, and by the poor education system. The agricultural sector, which employs two-thirds of the economically active population, is likely to continue to be impacted by weak commodity prices.

In 2017, the country continued to run a trade balance deficit, although this is expected to improve slightly. The value of imports of capital goods and oil products remains high, despite weak oil prices. Nonetheless, completion of a number of construction projects should help contain imports of capital goods. The high level of international aid and remittances by expatriate workers will offset the repatriation of dividends by the foreign companies with leading positions in the textile sector. FDIs are rising steadily and make it possible to fund the current account deficit. Accordingly, foreign exchange reserves are expected to continue to increase to reach almost 6 months of imports. As regards the public accounts, the fiscal deficit should recover as the country has improved the collection of taxes. Moreover, the government has introduced a fiscal consolidation policy and the public accounts are benefiting from the dynamism of the economy. In this context, the public debt will remain stable. However, the public finances will remain highly dependent on foreign aid. Meanwhile, credit is growing rapidly and the banking sector remains weak because of inadequate supervision. At the same time, the economy as a whole is highly dollarized and foreign currency deposits account for almost all deposits. The banks are, therefore, heavily exposed to exchange rate risks.

During the parliamentary elections of July 2013, the Cambodian People's Party (CPP) led by Prime Minister Hun Sen won a greatly reduced number of seats and the Cambodia National Rescue Party (CNRP) contested the elections and refused to sit in parliament for nearly a year. The opposition benefits from weariness with Hun Sen's reign, acute social tensions over wrongful expropriations and working conditions in the textile sector. The country has thus been affected by widespread protests, severely suppressed by the ruling powers. In July 2014, a fragile agreement was made between the CPP and the CNRP and the opposition candidates have since sate in parliament. This agreement provided, in particular, for the position of vice-president to be awarded to a CNRP member of parliament and for a government commitment to combat endemic corruption, but the government and the opposition clash frequently. The Prime Minister decided to postpone the elections by five months, without consulting the opposition. They will now be held in June 2018. In addition, we might see renewed mass protests in view of an observed increase in political repression. Finally the business climate is still marked by a lack of transparency, considerable legal instability and a high level of corruption.