According to the International Monetary Fund’s (IMF) Regional Economic Outlook for April 2024, Cambodia’s inflation rate is anticipated to maintain a stable pace at 2.3 percent this year, a slight increase from 2.1 percent in 2023. This forecast aligns Cambodia with trends observed across other regions in Asia and the Pacific.
The report highlights the significant progress Asia and the Pacific have made towards achieving economic stability, particularly with strong disinflation and enduring growth. For Cambodia, the IMF projects an uptick in inflation to three percent by 2025.
In terms of economic expansion, Cambodia is expected to witness a growth rate of six percent in 2024, slightly increasing to 6.1 percent in the following year. This places Cambodia second in the ASEAN region, just behind the Philippines, which is expected to see a consistent growth rate of 6.2 percent for both years.
Reflecting on the recent past, the IMF has estimated that Cambodia’s economy expanded by five percent in 2023. The robust demand within emerging markets played a pivotal role in this achievement, especially in the latter half of 2023, amidst a backdrop of stringent monetary policies and subdued external demand.
A notable decline in headline inflation, particularly in emerging Asian markets, was attributed to strategic monetary tightening throughout 2022 and the early stages of 2023, coupled with decreasing commodity prices, a reduction in global manufacturing goods price inflation, and the resumption of supply capacities post-COVID-19 pandemic.
Looking ahead to the entirety of 2024, the IMF projects a slight deceleration in growth for Asia and the Pacific, forecasting a rate of 4.5 percent. This revised projection, however, is still a sign of optimism, marking an improvement from previous forecasts and underscoring the regional contributions towards global growth, estimated to be around 60 percent.
The IMF acknowledges the fading inflation rates and the potential for earlier monetary policy easing could substantially aid in achieving widespread economic stability. Nonetheless, enduring geo-economic divides and rising geopolitical tensions pose significant threats to the region’s long-term growth prospects.
China, a key player in the region, witnessed a challenging phase sustaining growth momentum in the early months of 2023, primarily due to a downturn in the property sector. Despite these challenges, China’s economy managed to grow by 5.2 percent in 2023, exceeding previous forecasts after the implementation of a stimulus package in October.
For Cambodia, the National Bank of Cambodia (NBC) forecasts industry sector growth at 8.6 percent, services at 6.4 percent, and agriculture at 1.3 percent in 2024. However, the economy faces several external and internal challenges, including the possibility of slower growth in partner countries, continued monetary policy tightening, and the impacts of global geopolitical tensions and climate changes.
Source: Khmer Times
