The Asian Development Bank (ADB) said Wednesday that Cambodia was expected to have one of the lowest rates of inflation among ASEAN countries this year despite the global surge in fuel and fertiliser prices.
In the annual update to its Asian Development Outlook, the bank said it upwardly revised its inflation forecast for Cambodia this year from 4.7 percent to 5.0 percent — below the average forecast of 5.2 percent for the whole of Southeast Asia.
“Inflation accelerated faster than anticipated in the first half due to the strong pass-through effects of fuel price increases,” the update said. “Because of this, the inflation forecast for 2022 is revised up from the earlier projection.”
Inflation is expected to be lower in three other ASEAN economies, namely Malaysia (2.7 percent), Brunei (3.5 percent) and Vietnam (3.8 percent).
Elsewhere in Southeast Asia, the ADB expects inflation to exceed Cambodia’s rate with forecasts of 4.6 percent in Indonesia, 5.3 percent in the Philippines, 5.5 percent in Singapore, 6.3 percent in Thailand, 7.4 percent in Timor-Leste, 16 percent in Myanmar and 17 percent in Laos.
To cool inflationary pressures, the bank noted that Cambodia, Indonesia, Malaysia, the Philippines, Thailand and Timor-Leste had implemented fuel subsidies. Laos had suspended excise taxes on fuel products and Vietnam reduced its environment protection tax.
“Inflation was contained in Vietnam and decelerated in Malaysia due to government subsidies and price controls,” the update said.
For food, the bank said the ASEAN countries with “noticeably higher prices” were the Philippines (maize), Thailand (meat), Singapore (eggs) and Brunei (oils and fats).
“Among the varied reasons for rising prices are supply disruptions caused by the war in Ukraine, higher energy prices and the cost of credit, and lower agricultural production from bad weathers,” the ADB said.
It also noted inflationary pressures among economies whose currencies had fallen against the U.S. dollar, notably Laos, Myanmar and the Philippines.
Inflation projections for next year showed Cambodia’s rate of inflation falling to 2.2 percent, the lowest in the region after Brunei where inflation is forecast at 2.0 percent.
Among other Southeast Asia economies, inflation is forecast at 2.3 percent in Singapore, 2.5 percent in Malaysia, 2.7 percent in Thailand, 4.0 percent in Vietnam, 4.3 percent in the Philippines, 4.5 percent in Laos, 5.1 percent in Indonesia, 5.5 percent in Timor-Leste and 8.5 percent in Myanmar.
The ADB outlook for Cambodian inflation was in line with a report released by the International Monetary Fund on Tuesday — with one caveat.
The IMF said Cambodia’s inflation was expected to peak this year, be lower in 2023, and decline further thereafter “assuming it remains mostly confined to imported goods.”
On a year-on-year basis, the IMF noted that Cambodia’s rate of inflation hit 7.8 percent in June following significant increases in fuel and fertiliser costs. But it receded to 4.9 percent in August.
For the broader economic outlook, the ADB left Cambodia’s growth forecast for this year unchanged at 5.3 percent but lowered the projections for next year from 6.5 percent to 6.2 percent. These were a few percentage points higher than the IMF’s projections.