inadequate, resulting in shortages of skilled labor. The lack of skilled workers is a problem both for investors and for government efforts to improve public administration. Budgetary constraints limit the scope for developing education. (EIU Country Profile)Economic EnvironmentEconomic GrowthIn 2000 the EIU is forecasting GDP growth of 5.5%, rising to 6% in 2001 (EUI Country Report 2000). This may be because of continued political stability, a stronger regional economy that will support stronger export growth and sustained inflows of foreign aid (EUI Country Report 2000).Garments, Construction & Tourism Garments will remain the main industry, although new sectors are emerging such as agro-processing (EUI Country Report 2000). Cotton factories supplying the garment industry have been established in recent months (EUI Country Report 2000). In the service sector, growth will be driven by tourism, which hit record highs in 1999, and is forecast by the government to grow by 35% in 2000 (EUI Country Report 2000). As a result higher growth in construction will follow (EUI Country Report 2000). Agriculture is the least predictable component due to bad weather pests (EUI Country Report 2000).Macroeconomic stabilityCambodia is currently experiencing minimal inflationary pressures. The inflation rate averaged 5.6% because of the weak demand following the 1997-98 economic downturn. The good 1999-2000 harvest will keep food prices down this year. In 1999 the riel was largely stable. During 2000-01, there is no expected change.Recovery of Private InvestmentPrivate foreign and domestic investment fell by 44.8% in 1999, because of the Asian financial crises and precautions taken as to whether political stability was likely to be maintained (EUI Country Report 2000). When both factors improve, private investment is likely to strengthen during 2000-01. Red tape, corruption and hidden costs are generally less of a problem than neighboring Vie...
