IMF says Cambodia’s inflation to be stable at 2.3 percent in 2024
IMF says Cambodia’s inflation to be stable at 2.3 percent in 2024
Cambodia’s inflation will remain stable this year at 2.3 percent, marginally up from 2.1 percent for 2023, generally in line with other parts of Asia and the Pacific, said the IMF Regional Economic Outlook April 2024.
“With rapid disinflation and resilient growth, Asia and the Pacific are closing in on a soft landing,” the report, released recently said. It also pegged the projected inflation for Cambodia at three percent for 2025.
According to the IMF, Cambodia will grow at the rate of six percent this year and 6.1 next year. In ASEAN, it is only next to the GDP growth of the Philippines at 6.2 percent for both years.
The report also estimated that Cambodia’s economy had grown by five percent in 2023.
“Economic activity in Asia and the Pacific outperformed expectations in the second half of 2023, despite a challenging environment characterized by still-tight monetary policies and muted external demand. The region grew by five percent last year, 0.4 percentage stronger than forecast in October,” the report said as it attributed the growth to the robust demand in emerging markets.
According to the report, headline inflation has continued to decline, especially in emerging Asia, reflecting timely monetary tightening in 2022 and early 2023, retreating commodity prices, lower global manufactured goods price inflation and supply capacity coming back onstream following the Covid-19 pandemic.
For 2024 as a whole, growth in Asia and the Pacific is projected to slow modestly to 4.5 percent — an upward revision of 0.3 percentage points from last October, reflecting, among other things, a carryover from stronger 2023 outturns and policy support. The region is expected to remain the world’s most dynamic, contributing about 60 percent of global growth.
According to IMF, retreating inflation and, consequently, the prospect of earlier monetary easing have increased the likelihood of a soft landing, both in Asia and globally. “At the same time, increased geoeconomic fragmentation and geopolitical tensions continue to pose serious downside risks to medium-term growth in the region,” it said.
The report said that in China, the economy struggled to sustain the post-reopening momentum of early 2023, as the property sector correction deepened. New housing projects and sales continued to decline. Broader activity indicators were also lacklustre, with weak manufacturing and services purchasing managers’ indexes in the second half of 2023.
Outbound tourism also remained significantly below the pre-pandemic levels in China. Nonetheless, 2023 growth, at 5.2 percent, was 0.2 percentage points higher than forecast in the October 2023 Outlook with activity benefiting from a fiscal stimulus package announced by the government in October that will also carry over into 2024.
According to the National Bank of Cambodia (NBC), in 2024 Cambodia’s growth is to be driven by the industry segment which is expected to grow by 8.6, while services by 6.4 percent and agriculture by 1.3 percent.
The external challenges for this year, according to the Annual Report 2023 and Action Plan 2024 of NBC, include partner countries having slower growth than expected, continued tightening of monetary policy, tension from global geopolitics, divided global geo-economies and climate changes.
Internal challenges for the Cambodian economy include high indebtedness in the private sector, an increase in NPLs, weak recoveries from the construction sector, a decline in real estate demand and low arrivals of tourist flights.
