Published online by Cambridge University Press: 21 October 2015
Cambodia has not been spared from the pervasive impact of the global economic downturn. Certain sectors of the economy have been severely affected, very likely causing the economy to contract in 2009 for the first time in the past two decades. At the last quarter of 2009, the IMF, World Bank, and ADB, respectively, predicted growth of –2.75 per cent, –2.2 per cent, and –1.5 per cent for 2009, while the government predicted +2.1 per cent (UN Country Team 2009). The structure of the Cambodian economy is likely to change as its reliance on external factors has proven vulnerable. The economic and social impacts have been significant, especially as shown by job losses in the garment and construction sectors, less income amongst many households, and a likely increase in food insecurity amongst the 30 per cent of the population already living in poverty in 2007.
As everywhere in the world, prices of food and oil rose rapidly in Cambodia in the first half of 2008, only to slow in the second half of the year. Year-on-year inflation as measured by the consumer price index (CPI) went from a high of 13.7 per cent in January 2008 to 25.7 per cent in May and gradually declined to 13.5 per cent in December, according to the National Institute of Statistics (NIS), which suspended the release of the CPI for some months until the national elections in July 2008 were over. As the data was later released, the CPI for food items rose most rapidly, by 36.8 per cent in July, slowing to 23.2 per cent in December 2008. The price of rice, the most commonly consumed staple, jumped by approximately 100 per cent in May and remained 70 per cent higher than a year earlier in December. Fuel prices skyrocketed and plunged according to the international prices. The high inflation was largely attributable to international forces because Cambodia is a price taker for fuels and receives high prices for agricultural exports. For instance, the price of rice in international markets was up by about 180 per cent between July 2007 and June 2008 (CDRI 2008, p. 7).
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