Economic Analysis - Tourism Sector To Continue Powering Growth - MAY 2017

BMI View: We expect the tourism industry to continue driving Cambodia's economy, with arrivals up by 5.0% in 2016, breaking the 5mn barrier. The government's commitment to supporting tourism inflows from China, combined with Cambodia's comparative advantage in the sector, stand it in good stead , assuming the country's political risk remains under control.

Cambodia's tourism industry continues to post strong growth, with total arrivals up by 5.0% in 2016, as it picked up strongly in H216 and allowed the country to break the 5mn arrivals barrier. 2016 marked the 13th consecutive annual increase and a doubling of total arrivals since 2010, and we estimate total direct tourism spending to have hit almost 16% of GDP. The sector has been targeted by the government as a key economic growth driver and we believe that there is strong potential due to low cost labour, and natural and manmade attractions. Additionally, Cambodia's geographic location will allow the tourism sector to benefit from Asia's real GDP growth outperformance compared with the rest of the world as well as improved cooperation with its ASEAN neighbours under the ASEAN Economic Community framework.

When the indirect impact of tourism is taken into account, including tourism-related investment spending, the tourism sector rises to 30% of GDP, according to figures from the World Travel and Tourism Council. This figure dwarves Thailand's 20.8%, the second most tourism-reliant country in Asia, reflecting the importance of this sector as a key driver of Cambodian growth. While Vietnam remains the major source of visitors, at 19.1% of the total, China has long been the marginal growth driver, with its share rising to 16.6% in 2016 and average Chinese spending per visitor significantly higher than Vietnam.

Breaking The 5mn Barrier
Cambodia - Tourist Arrivals, '000
Source: BMI, Cambodia Tourism

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