Reports Say Vietnam Inflation At 8% This Year

Given the developments in the year to date and possibly influential factors in the final months, the whole-year inflation rate may be 8% as targeted, say the latest macro-economic reports of HSBC Vietnam and Vietcombank Securities Company.

The report of HSBC remarks the consumer price index (CPI) had risen 7% year-on-year by the end of October. After a sudden increase in September, the monthly inflation rate has eased from 2.1% to an average 1.3%.

“As inflation is forecast to pick up gradually towards the year’s end, we do not expect the central bank to further loosen the monetary policy and anticipate interest rates in the open market will remain stable at 8%,” says the report.

Meanwhile, as per the report of Vietcombank Securities Company (VCBS), the monthly CPI growth rate will be 1% mainly because of seasonal factors, while global prices of fuels and foodstuffs tend to fall slightly, power prices are stable and the chance of impact from money supply is low.

“If CPI in November and December increases 1% as we forecast, CPI of the entire year will grow 8%. Then, inflation expectation should remain low in 2013, which will facilitate economic growth next year and help the Government make polices for economic restructuring and development,” says the report.

In regards to economic growth, HSBC predicts GDP will grow 5%, while VCBS gives a figure of 5.2%, consistent with the forecast of 5-5.5% of the Government.

VCBS says the fiscal and monetary policies have not produced the desired results, as credit growth had only reached 2.27% as of end-October and aggregate demand is forecast to recover slowly in the final two months. However, the GDP growth predicted by VCBS is based on a rise in seasonal consumption.

Meanwhile, HSBC notes the growth that it forecasts is lower than the rate of around 7% in previous years.

The Government has realized the shortcomings of State-owned enterprises and its reform is going in a right direction. Still, there has been no specific remedy for State-owned enterprises, states the report of HSBC.

Observers are wondering what the Government will do to tackle red tape and improve the business environment in order to assist local farmers, producers and private investors as well as foreign investors wanting to do business in Vietnam.

In addition, how the coordination between central and local authorities will be tightened is also a matter of concern, says HSBC.

Source The Saigon Times Daily

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