Cambodia registered a remarkably sound consumer inflation rate of 2.5 per cent in the first half (H1) of this year by virtue of the slow rise in food prices, slipping petrol rates and stabilisation of local currency against the US dollar, the National Bank of Cambodia (NBC) said in its semi-annual report on Wednesday.
The central bank said the increase in prices for foodstuffs was driven down to four per cent from the beginning of the year by Covid-19 disruptions to goods transport.
With the unforeseen plunge in global oil prices in mid-January weighing heavily on the market, petrol-related goods and services saw a 3.5 per cent deflation over the first half, it said. Retail petrol price slid to 2,950 riel ($0.72) per litre from 3,650 in the second half of last year.
NBC governor Chea Chanto said the Covid-19 outbreak snowballed into a global health catastrophe and created an economic predicament eclipsing in severity the 2008-2009 Financial Crisis.
This, he said, has delivered a devastating blow to key pillars of the Kingdom’s economy – trade, investment and international visitors.
“Against this backdrop, Cambodia has laid out a handful of measures to control the spread of Covid-19. Be that as it may, we have a steadfast macroeconomy . . . we managed to maintain low inflation and a stable exchange rate,” Chanto said.
The banking sector saw strong growth and actively contributed to providing liquidity to the economy, he said, adding that deposits and loan balances continued to grow amid the mounting economic challenges.
“The main risks to the banking sector stemming from the continued Covid-19 pandemic include a decline in the incomes of people and businesses which could result in the stifled growth of loans and deposits, a slump in the construction and real estate industry and a slowdown in foreign capital inflows into the banking industry,” he said.
Business Research Institute for Cambodia CEO and chief economist Hiroshi Suzuki told The Post that the Kingdom’s first half consumer inflation rate was very stable and reflected the authorities’ efforts to stabilise the macroeconomy.
“We appreciate the great efforts expended by the National Bank of Cambodia and the Ministry of Economy and Finance to stabilise the macroeconomy of Cambodia even in this very tough situation under Covid-19.
“Although the international market price [of oil and other commodities] fluctuated, now we can see stabilised prices because of the decreasing demand in the world market under Covid-19.
“I would like to agree with the estimated inflation rates by the NBC and other international organisations which all show stable inflation rates,” Suzuki said.
The exchange rate of the local currency appreciated 1.6 per cent to 4,104 riel against the greenback, compared to 4,036 riel in the same period last year, said the NBC. It predicted that inflation will remain at 2.5 per cent.