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Copyright © 1998-2013 Vietnam Venture Group, Inc. All rights reserved. September 15, 2008
INFLATION SPECIAL REPORT
Vietnam aims to limit 2008 inflation at 25 pc - govt The Times of India
Sunday, 14 September 2008
HANOI: Vietnam, which has
been grappling with soaring inflation, aims to limit the rise in consumer prices
for the whole year to 25 per cent, the government said.
Consumer prices in the Southeast Asian country of 86.5 million people jumped 28.3 per cent last month from a year ago, mainly due to a spike in food and fuel prices.
"Our objective is to unite our force and mind to strive to achieve a growth of 7 per cent and inflation at 25 per cent," Prime Minister Nguyen Tan Dung told a cabinet meeting in Hanoi this week.
"The policy of tightening credit must be continued, but with flexibility in order to accommodate businesses," a government report seen Friday quoted Dung as saying.
Dung asked the government to keep the monthly trade deficit - due mainly to high oil prices as the country relies on refined product imports - to under $1 billion between now and the end of the year to bring annual trade gap this year to under $20 billion.
The Communist Party government is facing its biggest economic test since market liberalization began in earnest in the mid-1990s. It has cut growth targets to 6.5-7 per cent from around 8 per cent previously and raised interest rates three times this year to fight double-digit inflation.
In July the Asian Development Bank revised Vietnam's annual inflation this year up to 19.4 per cent, from 18.3 per cent previously estimated.
Vietnam inflation hits 28 percent, trade gap grows
HANOI, Vietnam: Vietnam's inflation rate has reached its highest level in 17 years, hitting 28.3 percent in August, while the trade gap continued to widen, the government said Monday.
The skyrocketing consumer price index was driven by price increases in food, transportation, housing and construction materials, said the General Statistic Office, which often issues the data ahead of the month's end based on estimates.
Vietnam's inflation rate is among the highest in Asia.
Overall food costs were up 44.15 percent from a year ago, the government said. The price of housing and construction materials rose 27.4 percent, and transportation costs increased by 25.6 percent.
The inflation rate was 27 percent in July, 26.8 percent in June, and 25.2 percent in May.
The Ministry of Planning and Investment has forecast that inflation for all of 2008 could hit 25 percent.
Soaring inflation has led to a wave of strikes at factories around the country from workers seeking higher wages.
As part of its effort to curb inflation, Vietnam's government has increased interest rates and postponed thousands of public investment projects. The government also plans further spending cuts, according to the state controlled media.
The trade deficit continued to widen in the first eight months of the year, reaching nearly US$16 billion — already more than the US$14.1 billion for all of 2007. Through August, imports totaled nearly US$60 billion, while exports brought in more than US$43 billion.
Imports in August surged by 54.1 percent from a year ago, while exports increased by 40.6 percent, the statistics office said.
The Asian Development Bank has lowered its growth forecast for Vietnam to 6.5 percent this year and 6.8 percent next year.
Last year the country's economy expanded by 8.2 percent.
Scores struggle amid inflation in Vietnam
1st big downturn in nearly 20 years
By Seth Mydans
New York Times News Service / August 24, 2008
HANOI - Even the ghosts are suffering from inflation in Vietnam this year.
August is the month when Buddhists ply the hungry ghosts of the dead with food and wine and cigarettes and honor them with paper offerings that represent the good things in life: cars, houses, motorbikes, stereo sets, and fancy suits.
But like everything else in Vietnam, these brightly colored offerings have risen steeply in price, and shopkeepers say people are buying fewer gifts to burn for the dead.
With inflation rising to 27 percent last month - the highest in Asia - and food prices 74 percent above those a year ago, Vietnam is suffering its first serious downturn since it moved from a command economy to an open market nearly 20 years ago.
Last month, the government raised the price of gasoline by 31 percent to an all-time high of 19,000 dong ($1.19) per liter (or roughly $4.50 a gallon). Diesel and kerosene prices rose still higher. The country's fledgling stock market, which had been booming a year ago, has fallen in volume by 95 percent and is at a virtual standstill.
Squeezed on all sides, people are cutting back on food, limiting travel, looking for second jobs, delaying major purchases, and waiting for the cost of a wedding to go down before marrying.
Some village women who traveled to Hanoi to sell special homemade candies for the hungry ghost festival say they have not earned enough this year to return home.
Given this slowdown, Vietnam, Asia's youngest tiger, which had been growing by about 8 percent a year for the past decade, is scaling back its plans for growth and economic development.
Last month, the Asian Development Bank forecast that growth would slow to 6.5 percent this year. Some economists say even that figure is probably too high. Trade and current-account deficits have widened.
The mood in Vietnam, after years of upward mobility, is tense, said Kim N.B. Ninh, the Asia Foundation's country representative. "I think people are pessimistic," she said. "You sense a tougher environment, a more restricted environment, a more pessimistic environment."
Some are losing confidence in the ability of the government to manage the economy. And rumors of price increases have caused panic buying of fuel and rice.
In part, economists say, Vietnam is suffering from the worldwide economic downturn and from high inflation that has spread through Southeast Asia.
But they say the problems are also self-inflicted, the result of an overheated economy as Vietnam raced forward with inadequate safeguards. Too much capital, particularly from foreign investment, has collided with bottlenecks in infrastructure and capacity.
The education system, meanwhile, has produced too few skilled and semiskilled workers for Vietnam to move up quickly into more complex manufacturing industries. Factory workers who have been leading Vietnam's rise from poverty often are unable to sustain an urban life on a factory wage.
"Some people who have been moving from rural areas to seek jobs in industrial zones are deciding that it is not worth it, and people are moving home," said Ben Wilkinson, associate director of the Vietnam program at John F. Kennedy School of Government at Harvard.
After a steep reduction in the poverty rate from 58 percent of the population in 1993 to around 15 percent last year, some people - including those who had bought their first motorbike or mobile telephone - are slipping back again below the poverty line.
Prime Minister Nguyen Tan Dung said in May that the number of households going hungry had doubled in one year. Everywhere they turn these days, people in Vietnam see higher prices.
In the long term, most economists agree, Vietnam will continue the transformation it began in the early 1990s with a new policy of economic restructuring.
© Copyright 2008 Globe Newspaper Company.
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