Cambodia's per capita income is increasing but is still low compared with other countries in the region. The economy is stable and the government has made significant progress in reducing poverty levels. In 2005 the government developed a comprehensive reform agenda set out in the National Strategic Development Plan, which has solid support from foreign donors. The NSDP II (2009-2013) was approved in May 2010 and at the Cambodia Development Cooperation Forum in June 2010 donors confirmed their intention to spend some $1.1 billion in development assistance during 2010.
Cambodia sustained a decade of high economic growth until the global economic downturn in 2008/09. Drops in exports, tourist arrivals from beyond the region, and in foreign direct investment, affected the economy severely during the economic crisis. Growth recovered in 2010, and was around 6% in 2011. The financial sector is buoyant, with loan growth increasing.
Cambodia remains largely agrarian with a large percentage of the population engaged in subsistence agriculture. An estimated 31% of Cambodians lived below the poverty line in 2007. Inequality has grown over the last two decades. Much infrastructure is rudimentary and the country remains dependent on external donor funding for over a third of its expenditure. From 1997-2007, economic growth was narrowly based (primarily in the garment, construction and tourism sectors) with modest linkages to the rest of the economy and this pattern has resulted in limited benefits to the 84% of the population who live in rural areas. To produce more sustainable, faster and broader growth the priority of the Cambodian government is now to tackle core governance issues and improve the climate for investment, especially in agriculture.
Cambodia has made progress in education enrolment rates and in some health reforms, although there is still concern about high rates of maternal and child mortality. Cambodia has also instituted broad governance reforms in public financial management, and in decentralizing government from the center to local governments. Further progress is needed in those, and in tackling corruption and in judicial reform, and improving revenue transparency. A long-awaited anti-corruption law was passed in March 2010 and government is setting up the structures to implement that law.
The government has made progress on adopting new and amended legislation to fulfill its World Trade Organization (WTO) membership commitments (Cambodia was the first LDC to conclude membership negotiations with WTO). In 2005, Oil and natural gas deposits were found in Cambodian territorial waters but quantities have not yet made public. Commercial extraction is expected to begin in 2016. Further oil and gas fields lie within an area of overlapping territorial claims in the Gulf of Thailand. Limited progress has been made with Thailand over resolving rights within this area.
The Khmer people have lived in the Indochina area for at least 2,000 years. The Khmer Kingdom, with its capital at Angkor from around 900 AD, was the most powerful mainland Southeast Asian state for most of the period from 802 to 1432. Most Cambodians consider themselves to be Khmer, descendants of the Angkor Empire. The Kingdom enjoyed its heyday around 1200, when it included much of present-day Laos, Thailand and Vietnam. From 1432 the Kingdom declined, losing much territory to increasingly powerful neighbors.