The International Monetary Fund (IMF) has forecast a 3.1 percent increase in Cambodia’s consumer prices this year as the economy recovers from last year’s downturn.
In its World Economic Outlook released in Washington Tuesday, the IMF also projected that consumer prices would rise at a slower pace of 2.8 percent next year. In 2020, the increase was estimated at 2.9 percent.
The forecast for Cambodia is lower than the 4.9 percent average increase in consumer prices that the IMF forecast for emerging market and developing economies in 2021.
It was also lower than projections for four other ASEAN economies — Myanmar (5.0 percent), Laos (4.9 percent), Vietnam (3.9 percent) and the Philippines (3.4 percent).
Among other ASEAN economies, Singapore was projected to have the smallest increase in consumer prices (0.2 percent) followed by Brunei (0.8 percent), Thailand (1.3 percent), and Indonesia and Malaysia (both 2.0 percent).
According to the global outlook, commodity prices — particularly for oil — are expected to “firm up further” in the months ahead.
“Given their record-low levels of a year ago, firmer prices should mechanically lift consumer price indices, and headline inflation, in particular, could turn volatile in coming months,” it said.
But “the volatility should be short lived. Baseline projections show a return of inflation to its long-term average as the remaining slack subsides only gradually and commodity-driven base effects fade away.”
The IMF said the restrained outlook for consumer prices reflected global developments in labour markets.
“Subdued wage growth and weak worker bargaining power have been compounded recently by high unemployment, underemployment, and lower participation rates.
“Moreover, various measures of underlying inflation remain low,” it said.
“IMF staff analysis on sectoral price developments points to muted price pressure, both in sectors where pricing is typically less sensitive to the business cycle and in sectors where prices tend to respond to aggregate demand fluctuations.”
Source: Agency Kampuchea Press