Vietnam Growth rate or Inflation?
Tuesday, 16. September 2008, 15:02:40
Report: ADB says Vietnam should keep growth rate at 6.5% this year
"Aiming for lower growth rate for keeping a lower inflation and smaller trade deficit, so Vietnam may target 6% growth rate next year then could reach to a higher growth rate in 2010", Mr. Ayumi Konishi, ADB country Director for Vietnam states at the launching of Asian Development Outlook 2008 (ADO Update).
Mr.Konishi insists that there is a trade off between the growth target for the next year and growth potentials for the subsequent years. While congratulates Vietnamese government effort in controlling inflation and touch measures with the economic situations, the ADB country Director also warns premature optimism.
"It is too early to relax the policy stance. In absolute terms, inflation and trade deficit are still very high and it will still take some more months to firmly stabilize the situation", said Mr. Konishi, spotting at Vietnamese challenge in curbing with trade deficit in the last 4 months of the years.
In a regular cabinet meeting early this month, Vietnamese government targets trade deficit for the second half of 2008 is under USD 1 billion each month. Essential materials and oil price in world market has slightly decreased, making the country out of price pressure for major import goods.
It is better to well control inflation rather than to congratulate the high but unstable rate
Currently, world oil price slights under the level of USD 100/ barrel, bringing more hope to Vietnam to cut off retail price for strategic fuels and key materials. In fact, the MoF and MoIT has decided today reducing price for diesel oil at 2.7 cent/ litre, while people are still waiting a similar cut off to gasoline price.
Vietnam economy passed through a turmoil at the first half of year 2008 when trade deficit was at USD 3.2 billion in April and 1.9 billion in May, plus a shock of exchange rate up to VND 20,000 per USD in the second half of June in the black market. (This rate is almost 27% higher than the current nominated rate by SBV).
Increasing basic interest rate, tighten monetary policy, raising compulsory reserve rate, issue more bonds, widen variation range of stocks market and exchange rate...are among measures that the government prompted to stabilize the economy.
But the announcement for USD reserve from SBV by Governor Nguyen Van Giau is considered a radical move as it's the first time ever, the national foreign reserves are reported to the public. It contributes to calm down the market, which is in thirst of foreign currencies, and to prevent USD-speculation from black market.
Those efforts create confidence for foreign investor and help to bring in FDI at almost USD 50 billion for the fiscal year 2008. Nevertheless, ADB economist still caution Vietnam with difficulties ahead in front of uncertain global economic prospects.
Banking weakness, the possible of bad debt and the existence of bottlenecks in FDI attraction such as poor infrastructure, lacking of adequate human resources...may be obstacles for Vietnam in achieving its target./.
"Aiming for lower growth rate for keeping a lower inflation and smaller trade deficit, so Vietnam may target 6% growth rate next year then could reach to a higher growth rate in 2010", Mr. Ayumi Konishi, ADB country Director for Vietnam states at the launching of Asian Development Outlook 2008 (ADO Update).
Mr.Konishi insists that there is a trade off between the growth target for the next year and growth potentials for the subsequent years. While congratulates Vietnamese government effort in controlling inflation and touch measures with the economic situations, the ADB country Director also warns premature optimism.
"It is too early to relax the policy stance. In absolute terms, inflation and trade deficit are still very high and it will still take some more months to firmly stabilize the situation", said Mr. Konishi, spotting at Vietnamese challenge in curbing with trade deficit in the last 4 months of the years.
In a regular cabinet meeting early this month, Vietnamese government targets trade deficit for the second half of 2008 is under USD 1 billion each month. Essential materials and oil price in world market has slightly decreased, making the country out of price pressure for major import goods.
It is better to well control inflation rather than to congratulate the high but unstable rate
Currently, world oil price slights under the level of USD 100/ barrel, bringing more hope to Vietnam to cut off retail price for strategic fuels and key materials. In fact, the MoF and MoIT has decided today reducing price for diesel oil at 2.7 cent/ litre, while people are still waiting a similar cut off to gasoline price.
Vietnam economy passed through a turmoil at the first half of year 2008 when trade deficit was at USD 3.2 billion in April and 1.9 billion in May, plus a shock of exchange rate up to VND 20,000 per USD in the second half of June in the black market. (This rate is almost 27% higher than the current nominated rate by SBV).
Increasing basic interest rate, tighten monetary policy, raising compulsory reserve rate, issue more bonds, widen variation range of stocks market and exchange rate...are among measures that the government prompted to stabilize the economy.
But the announcement for USD reserve from SBV by Governor Nguyen Van Giau is considered a radical move as it's the first time ever, the national foreign reserves are reported to the public. It contributes to calm down the market, which is in thirst of foreign currencies, and to prevent USD-speculation from black market.
Those efforts create confidence for foreign investor and help to bring in FDI at almost USD 50 billion for the fiscal year 2008. Nevertheless, ADB economist still caution Vietnam with difficulties ahead in front of uncertain global economic prospects.
Banking weakness, the possible of bad debt and the existence of bottlenecks in FDI attraction such as poor infrastructure, lacking of adequate human resources...may be obstacles for Vietnam in achieving its target./.
WIDGETIZE