IMF puts Vietnam’s inflation at 13.75 percent
JUNE 24, 2011
VietFinanceNews.com – The International Monetary Fund (IMF) has predicted that the increase in Vietnam’s Gross Domestic Product will slow down to 6.25 percent this year from 6.78 percent in 2010.
The IMF said on its website on June 24 that the country’s inflation rate will reach 13.75 percent before dropping to 6.25 percent in 2012, assuming that the price of international goods does not increase.
The IMF’s prediction is lower than the Vietnamese government’s target set in late May – inflation of 15 percent in 2011.
The IMF believed Vietnam’s foreign currency reserve will be restored this year but at a low level.
In a meeting of donors to Vietnam early this month, the IMF reckoned Vietnam’s foreign currency reserve is about US$13.5 billion.
JUNE 24, 2011
Vietnam Inflation Surges
VietFinanceNews.com – Vietnam’s consumer price inflation surged in June to its fastest pace in more than two and a half years, pressuring authorities to step up the battle against rising prices and bolster enforcement of previous tightening measures.
The consumer price index rose 20.82% on-year in June, up from May’s 19.78%, the General Statistics Office said Friday. It attributed the rise to higher prices of food and foodstuffs, education services, transport and housing, and building materials.
In monthly terms, the index rose 1.09% in June, down from May’s 2.21% rise. The index is up 13.29% since the end of 2010.
Inflation “is definitely not peaking yet,” said Santitarn Sathirathai, an economist with Credit Suisse in Singapore. “I think it would peak in August or September and could reach around 23% before coming down.”
He expects inflation to average 17% this year and to end 2011 at 16%.
Once seen as among the most promising of developing economies, Vietnam’s economy has spiraled out of control over the past year or so, leaving the government to battle high inflation, an entrenched trade deficit and low confidence in the local currency, which has been devalued several times.
In late February the government unveiled a series of policies aimed at righting the ship, including pledges to keep 2011 credit growth below 20%, cap the budget deficit at 5% of gross domestic product, boost domestic production and curb the trade deficit. The central bank has raised benchmark interest rates several times this year.
“One of the things we’re trying to assess is whether it’s just that these policies take time to kick in, or whether there’s a lot of loopholes,” Mr. Santitarn said.
He said he expects the central bank to raise interest rates another percentage point this year.
The data come after the International Monetary Fund on Friday said it expects Vietnamese inflation to hit 13.75% this year, before declining to 6.25% in 2012, due to lower demand and favorable base effects.
On June 3, the government cut its 2011 GDP growth target to 6% from 6.5%, and lifted its inflation forecast to 15% from 11.75%. It was the second time this year the government lowered its growth forecast and raised its inflation outlook. (Wall Street Journal)