Phnom Penh - Double-digit inflation would not hurt the Cambodian economy overall but could have a dire affect on the country's millions of poor, a World Bank economist said Tuesday. Like most of East Asia and the Pacific, Cambodia had been badly hit by inflation with the year-on-year rate at the end of 2007 reaching a nine-year high of 10.8 per cent, Huot Chea said.
However, the bank said Cambodia's economy continued to grow rapidly with gross domestic product (GDP) up an estimated 9.6 per cent last year.
"High inflation rates will not pose a serious threat to the Cambodian economy but will impact on the poor," Chea told journalists.
"About 25 per cent of poor people spend 70 per cent of their income on food," the economist said. "As long as food prices keep rising, this will automatically impact on the poor."
He said inflation had pushed the price of the national staple, rice, up so far that what would have once bought 3 kilograms in some cases now just bought 1 kilo.
Hikes in international oil prices, which have put the cost of petrol up to 1.25 dollars a litre in a country where millions earn less than a dollar a day had also contributed, he said.
The bank also expressed concern about Cambodia's growing trade deficit, which it estimated would grow from 6.8 per cent to 7.3 per cent of GDP this year.
However, overall, it said Cambodia's economy was in good shape and was mainly being impacted by outside factors, including the rising world price of oil and the crisis in the US economy.
"Although risks have increased, economic prospects for 2008 remain strong," the bank said in a press release.
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This article is extracted from:
http://www.earthtimes.org/articles/show/195931,rocketing-inflation-hurting-cambodias-poor-world-bank-says.html
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