Vietnam’s inflation forecast at 15pct in 2011: UN ESCAP

Vietnam’s GDP (gross domestic product) growth would be 6.2 percent, inflation is likely to be 15 percent in 2011 and Vietnam needs to have medium and long term measures to maintain the sustainable economic development, according to the information in the socio-economic situation survey report in Asia-Pacific of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)

Vietnam’s public debts exceed 50 percent of GDP

ESCAP’s report on Vietnam’s economic situation showed after reaching strong growth in 2009, Vietnam’s economy continued to gain faster growth in 2010. However, there are still concerns about the overheating development situation. The inflation remains high. Currently, Vietnam is one of nations with the highest fiscal deficit in Southeast Asia, with constantly increasing public debts. So far, Vietnam’s public debts exceed 50 percent of GDP. As forecasted, in 2011, Vietnam’s GDP growth will slow to be about 6.2 percent.

Pisit Puapan, expert in charge of economic issues of UN ESCAP, said that the ability of falling into the average-income trap is unwanted situation in many Asian countries. UN ESCAP has developed two scenarios, including a script called Asian century and a pessimistic scenario. Vietnam and Thailand are faced with the situation of globalisation in the price whereby the price is increasing higher than the domestic income.

Vietnam has to spend at least six months to lessen inflation

Le Xuan Ba. President of Central Institute for Economic Management (CIEM), said that in recent years, the inflation situation in Vietnam has been relatively complex, and this is one of the “headache” issues of the government. Statistics show in 2010, Vietnam’s inflation was at 11.75 percent. If comparing with 2008, this inflation ratio is even lower. However, comparing with the target set by the National Assembly (NA), this figure is higher. By the end of April, the country’s inflation rose to 9.64 percent, exceeding NA’s allowable inflation for the whole year. With this evolution, many comments have been raised on the inflation issue this year. “At the recent government meeting, the government is determined to strive to maintain the inflation equalling to the figure in 2010. Many predictions showed that inflation may go down from May. “Personally, I predict, if our efforts of keeping the inflation at lower than 15 percent is good enough because to lower inflation we need to have more time, maybe six months or nine months”. Ba said.

Ba said, for a full review, inflation in Vietnam is due to the relative obsolete economic structure. Our growth is the growth in width, based on capital investment, less based on the knowledge economy, science and technology. Our capital investment efficiency is not high, even some investments are not effective. If wanting to have no inflation or low inflation, we have to restructure the economy, improve the labour productivity and investment efficiency. If not, the inflation will be a relative standing matter. “Maybe today by different measures we can tame inflation but then it would flare again at any time. We must have a combination of both growth in width and growth in depth and should focus on the development of science and technology and knowledge” he added.

Inspecting the capital mobilisation of foreign-invested enterprises (FIEs) in Vietnam
According to Ba, in 2010, Vietnam attracted over $17.2 billion of registered foreign direct investment (FDI) and FDI disbursement reached $11 billion. This is a quite high disbursement if comparing the first years of Vietnam’s FDI attraction when the disbursement ratio reached only one third of pledged FDI capital. However, there are some opinions that of $11 billion of FDI disbursement in 2010, in fact, foreign investors spent only $8 billion on disbursement and the rest is domestic capital attraction. At the week meeting of Ministry of Planning and Investment (MoPI), minister Vo Hong Phuc has asked departments and authorities to carefully review this issue. – Thanhnien

Posted by VBN on May 9 2011. Filed under Economy News. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry